In the midst of a sudden and deep recession that has paralyzed much of the real estate market, Gordon Sondland wants to make a deal.
Portland’s most famous hotelier wants to sell 1.6 acres across the street from the Portland Convention Center.
At first blush, it seems like just another real estate deal.
Except for the seller. And the parcel of land. And the timing. And the history.
Sondland is the former U.S. Ambassador to the European Union who became the star witness in last year’s impeachment proceedings against President Donald Trump. Sondland was appointed ambassador by Trump after Sondland donated $1 million to his inauguration.
He then was fired by Trump in early February after he offered damaging testimony during the impeachment hearings.
Sondland returned to Portland just in time to see the American economy and his hotel empire ravaged by the COVID-19 pandemic. Sondland’s Provenance owns 13 hotels across the country, six of them in Portland. He owns a large portfolio of other properties includes the 1.6 acres, which he obtained from Metro in 2016 by sheer force of will.
The timing of the sale has local real estate executives scratching their heads.
“Everything is completely shut down right now,” said Todd Gooding, president of ScanlanKemperBard, a Portland real estate merchant banking firm. “There’s no demand for hotels, there’s no demand for anything.”
The sales attempt has fueled talk that Sondland needs cash. Provenance Hotels, Sondland’s company, has suffered steep occupancy declines, as has just about every hotel in the country.
On average, hotel occupancy in Portland has gone from 61.9% in early March to just 22.6% in late April, according to STR, a firm that closely tracks the hospitality industry. Revenue per available room in Portland, another key metric for the industry, has plunged from $74.98 in the first week of March to just $18.74 in the week ended April 25.
There are other changes afoot at Provenance. Bashar Wali, Sondland’s long-time top lieutenant who had ascended to the presidency, left the company last month.
Jim McDermott, Sondland’s attorney, said the notion that financial problems are forcing Sondland to liquidate assets is just flat wrong.
“There really is no story here,” McDermott said. “The plan all along was to realize cash from this parking lot asset and deploy that cash elsewhere. The current marketing effort that is underway is simply to make a broader spectrum of buyers aware that the property is for sale.”
And, McDermott said, this is not the first time Sondland has attempted to sell the land. He provided a copy of a purchase and sales agreement dated Oct. 2, 2018 between Sondland’s company and an unidentified purchaser from Colorado.
The sale fell through. This time around, Sondland has hired well-known local brokers George Diamond and Nicholas Diamond of the Real Estate Investment Group to help him sell the parcel.
“Rare close-in opportunity. Multiple uses per zoning across from Oregon Convention Center, close to I-5 & I-84,” a new sales brochure proclaims. At $10.5 million, the price equates to $142 per square foot. That’s a fraction of the price close-in raw land was fetching in pre-COVID days. Given the tremendous decline in prices since then, $142-per square foot seems about right.
“Given the current market,” Gooding said, “it’s no bargain.”
There’s obviously no guarantee Sondland will get the $10.5 million asking price. But he can afford to come down quite a bit and still make money.
Metro, the regional government and former owner of the land, essentially gave the property to Sondland’s company, Aspen Lodging Group.
Sondland and a coalition of other hotel operations had gone to war with Metro over its plan to subsidize construction of a large, 600-room hotel just north of the convention center. The struggle went on for years. Sondland was a tough negotiator. He argued passionately that it was unfair for his company to have to compete against a taxpayer subsidized competitor.
As part of a 2016 settlement, Sondland agreed to accept the public land offered by Metro.
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