Distressed Houston Hotel Sells For Fraction of Appraised Value

A chronically distressed hotel near George Bush Intercontinental Airport sold for a fraction of its pre-pandemic value. 

The Sheraton Houston North, at 15700 John F. Kennedy Boulevard, sold at auction for $14.8 million to an undisclosed buyer, Morningstar Credit reported. The sale is expected to close in June. The sale price works out to less than $36,000 per key.

A $34.4 million CMBS loan backed by the 416-key hotel has been in special servicing since a default at the onset of the pandemic in 2020. Philadelphia-based hospitality operator GF Hotels was appointed special servicer in April 2021.   

The hotel was valued at $68 million when the loan was issued; the appraised value has fallen to $16.2 million. 

The 280,000-square-foot hotel was built in 1982 and remodeled in 2013, appraisal district records show. 

Its performance is still below where it was when the loan was issued, but it’s recovering from pandemic levels. In October 2015, its revenue per available room was $126. It was $92 in June 2023 and $98 in May 2024. 

Houston’s hospitality market has been slowly recovering from the pandemic. The average RevPAR in the market was $78.30 in March, up from $68.79 a year before, according to the Greater Houston Partnership, using data from CoStar.

The hotel market in Houston lags national indicators. The average RevPAR for the country is $92, JLL reported. Even so, Houston ranked 11th in the country for RevPAR growth in the first quarter. 

The RevPAR recovery has been most pronounced for luxury hotels, which saw a 5.7 percent increase in the indicator over the past two years.

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