Carson City’s Ormsby House is expected to hit the market this week and the property’s broker is confident a buyer will be found.
“It is a dynamic, robust market right now. The amount of capital coming into this market is staggering,” Ted Stoever, senior vice president, Northern Nevada Land & Development Investment Services for Colliers International, told the Carson City Board of Supervisors on Thursday, March 16.
Stoever said he expected the property to sell as a hotel/casino because the building was designed for that use, or possibly as a franchise hotel with convention space. He didn’t expect it to be purchased for what he called a repurposed use such as senior housing or condominiums.
Stoever recently sold the Sundowner Hotel and Casino in Reno.
“I have a substantial list of investors that want to be in this area,” he said after the meeting.
In fact, he said he had already received interest in the property from two individuals in the meeting immediately following his appearance there.
Stoever said the capitalization rate, or rate of return on a real estate investment, is 5.5 percent in the region versus 3.5 percent in large metropolitan areas such as San Francisco, which is why investors are interested in buying property here.
Stoever was at the board meeting with Kim Fiegehen representing Don Lehr and Al Fiegehen, the downtown hotel’s owners, and Tom Metcalf, Metcalf Builders Inc., the contractor on recent exterior work done on the building.
The board last September granted an 18-month extension to the hotel’s building permit in an effort to get the property ready and make it more desirable for sale.
The permit extension allows a new owner to finish construction on the building based on building codes at the time permit was originally issued rather than bring it up to current codes, which would add significant costs and make the hotel harder to sell.
The board granted the extension on two conditions: the owners finish exterior construction work by Dec. 15, 2016, and update the board every six months on progress to market and sell the property.
Lee Plemel, community development director, said outside work had been nearly completed on deadline, with a small portion delayed due to an issue with NV Energy and the weather.
“I remind you they did nothing for 45 days,” said Garrett Lepire, who made the sole public comment, referring to the time between getting the building permit extension and starting construction. “What I’m really dismayed about is it is six months later and it’s still not on the market.”
Board members expressed some concern, too, the building couldn’t be sold in time to take advantage of the extension, which now has a year left on it.
“I see a six-month escrow and 60 to 90 days due diligence,” said Stoever.
The board was also concerned the owners, who have had the property for 16 years, were ready to sell knowing they wouldn’t recoup their investment in it.
“Do we have willing sellers?” Supervisor John Barrette asked Fiegehen.
“Very willing, very, very motivated,” said Fiegehen. “We are not going to get what we put into it. They are very openminded about the market.”
Stoever said he was readying a 30-page offering memorandum and would have the hotel on the market next week.
When asked after the meeting the sales price, Stoever said the price will range depending on the terms of the deal.