San Antonio Express-News: Lender takes over Thompson hotel at fore­clos­ure auc­tion

The San Antonio Express-News reported on the foreclosure auction of the Thompson San Antonio hotel. For this article, Lender takes over Thompson hotel at fore­clos­ure auc­tion, journalist Madison Iszler sought out Source Strategies for context on the downtown San Antonio hotel market.

South­ern Realty Trust took own­er­ship of the lux­ury Thompson San Ant­o­nio-river­walk hotel at a fore­clos­ure auc­tion Tues­day after no other bid­ders emerged — an indic­a­tion of how much the tour­ism industry in the urban core is strug­gling.

The lender bid $40.5 mil­lion for the prop­erty at 115 Lex­ing­ton Ave., accord­ing to law­yer James Rogers, who con­duc­ted the auc­tion.

Lex Avenue Hotel LLC, a com­pany affil­i­ated with Hou­s­ton-based developer DC Part­ners, bor­rowed $44 mil­lion from South­ern Realty Trust and an affil­i­ate to refin­ance the hotel in 2024 but fell behind on its pay­ments. The com­pany was given four chances to pay its past-due loan but failed to do so, accord­ing to a fore­clos­ure notice pos­ted ahead of the auc­tion.

The hotel opened in a challenging market.

In a state­ment last month, DC Part­ners said the 20-story Thompson had been pummeled by more down­town com­pet­i­tion, higher interest rates and fewer book­ings than expec­ted.

“These factors — includ­ing open­ing dur­ing COVID and a broader soft­ness in the San Ant­o­nio hotel mar­ket — cre­ated chal­lenges that were not anti­cip­ated and chal­len­ging to over­come,” the com­pany said. “This is not a reflec­tion of the qual­ity of the asset or the longterm viab­il­ity of the project, but rather a con­ver­gence of mar­ket forces affect­ing many developers across the coun­try.”

More competition in the high-end luxury hotel space has opened in recent years in the downtown San Antonio market:

The Thompson was the first new high-end hotel in San Ant­o­nio in more than five years. In an inter­view just before the Thompson opened, the hotel’s gen­eral man­ager said the lim­ited num­ber of lux­ury com­pet­it­ors was an advant­age.

That would soon change.

The Mon­arch San Ant­o­nio, the Kimp­ton Santo San Ant­o­nio-river­walk, the Plaza San Ant­o­nio Hotel & Spa and the Inter­con­tin­ental San Ant­o­nio River­walk hotels have opened down­town in recent years, expand­ing the city’s sup­ply of upscale options — as demand from vis­it­ors has lagged.

Source Strategies provided additional context to help understand the current conditions in San Antonio’s premiere hospitality market:

Fewer inter­na­tional and busi­ness trav­el­ers and con­ven­tion­eers are vis­it­ing San Ant­o­nio.

The num­ber of hotel rooms com­pleted in the urban core increased 7.1% between 2019-25, while the num­ber of nights sold decreased 13.4% dur­ing the same period, accord­ing to Source Strategies, a local hotel con­sult­ing firm.

Read the full article, Lender takes over Thompson hotel at fore­clos­ure auc­tion, on the San Antonio Express-News website.