‘We’ve never had anything like this’: Deeds show Davenport hotels in Spokane sold for more than $200M
Dec. 21, 2021 Updated Tue., Dec. 21, 2021 at 9:42 p.m.
A Colorado-based private capital firm has paid more than $200 million for Walt Worthy’s six downtown hotel properties, including the historic Davenport and the new Davenport Grand.
The sale price is nearly double what the five hotels and the parking garage just to the west of the Davenport Tower had been assessed at for the 2022 tax year, said Tom Konis, Spokane County assessor.
“We’ve never had anything like this,” he said Tuesday.
KSL Partners and the Worthys announced the sale earlier this month, but have not disclosed a total price. The deeds of sale received by the county auditor represent the amount paid for the real estate and may not reflect other payments KSL made, including for property or branding, Konis said.
Dave Black, chief executive officer and a principal at NAI Black, said it’s likely the total sale price for the hotels was at least double what’s recorded with the county.
“I would guess it’s probably the biggest deal ever to go down in Spokane,” said Black, who was not involved in the sale of the Davenport properties.
The sale price would also likely include the personal property inside the hotels and what’s known in the commercial real estate market as “goodwill,” which includes things like the brand name, reputation and future sales of a business, Black said. KSL has announced it will keep the Davenport name at the hotels in Spokane, and that it would retain all employees of the hotel group.
Other comparable real estate transactions in the Inland Northwest indicate the Davenport sale would be one of the largest. Worthy himself sold his Rock Pointe complex in 2005 for $82.8 million. Four years ago, Tacoma-based health care giant MultiCare purchased the Rockwood health clinic, Deaconess and Valley hospitals for $425 million.
Of the properties purchased by KSL Partners in the Davenport transaction, the Davenport Grand was the most expensive, at a sale price of $78.1 million. For the Historic Davenport, the site of the Worthys’ first hotel purchase more than two decades ago, KSL paid $45.2 million, a markup more than double the hotel’s assessed value this year, $21.2 million.
Hotel property values are based in part by market forces, Konis said, noting that his office adjusts the assessments based on available data. Some hotels report their income, others do not.
The COVID-19 pandemic hit the hospitality industry hard, shuttering four of the five hotel properties the Worthys owned for several weeks in 2020. As a result, many of their hotels lost value, as did other lodging properties in Spokane. On average, Spokane County hotels lost roughly 25% of their property value in 2021, Konis said.
The Davenport sale will likely cause assessors to adjust property values in the opposite direction, Konis said.
“There’s no good manual for this,” he added.
The workforce at local hotels is also struggling to reach prepandemic levels, despite low unemployment overall in the county. According to the latest estimates by the Washington Employment Security Department, jobs in the hospitality sector not affiliated with bars and restaurants are still down 32% from 2019.
That category largely includes hotel workers, said Anthony Anton, president of the Washington Hospitality Association.
“I think it’s great for people who have careers in Spokane hospitality,” Anton said of the sale. “It also speaks to the work of those folks. You have a buyer that says we believe in what you’re doing, keep doing it.”
Anton also said the Worthys deserved a lot of credit for building “a great local brand.”
Black said the sale would likely bolster an already bustling commercial real estate market in Spokane. NAI Black just posted a better year than 2019, he said, an indication that the city is ripe for growth should the pandemic reach its end.
“I think this is just a trend,” he said. “The real estate markets are hot, all of them.”
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