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July 25, 2014

Red Lion Hotels selling Bellevue property

The Spokesman-Review

Tom Sowa

Red Lion Hotels announced plans to sell the chain's Bellevue location, expecting to cash in on roaring property values in the Seattle area.

Red Lion hasn't set an asking price; it will offer the property to the highest bidder. Robert Anderson, an investment specialist for Seattle-based Kidder Mathews, which listed the property, said, "I'm not sure where the price could end up. Any definitive estimate of the sale price is difficult and will be decided by the market.

"Even on the first day (of being listed), we've had considerable interest," Anderson said.

The publicly traded Spokane-based hotel company announced the sale on Thursday, including a website that features the property's attractions and specifications.

Built in 1969, the hotel and its 6-acre lot are a short distance from Bellevue's central core and sit alongside the heavily traveled I-405 freeway.

Red Lion CEO and President Greg Mount said, "We recognized that this is the right time to list. This property is valuable and it is the right time to provide the best return for our shareholders."

The online listing suggests that a buyer could continue operating it as a hotel, convert it to other uses or raze and rebuild.

Chris Burdett, who specializes in hotel properties for the Seattle office of commercial real estate brokerage CBRE, said whoever buys the site will almost certainly remove the hotel and use the land for something bigger.

The website listing, in fact, reads: "prime Bellevue land development opportunity."

"This is a pure land play," Burdett said. "The hotel is a tear-down, so the value is in the development opportunity."

The last such sale in Bellevue was for over $500 per square foot, Burdett said. Depending on how Red Lion values the building and lot, the sale could fetch anywhere from $30 million to more than $80 million, he said.

The building footprint is more than 17,000 square feet. The full lot comes to around 262,000 square feet.

Nearby corporate neighbors include Microsoft, Expedia, T-Mobile and Intellectual Ventures. The listing notes that Sound Transit plans to build a light rail station across the street, which could produce an estimated 50,000 daily riders by 2030.

In recent years, cash-strapped Red Lion has been selling its buildings and converting them to franchise operations. It has 20 owned hotels and 23 franchise locations.

Since 2010 several large investors in Red Lion have urged management to sell the Bellevue property. Two years ago one investor group had estimated the Bellevue sale could generate between $20 million and $30 million.

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