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Heat Reaches Anaheim in Holiday Inn Sale

The Holiday Inn Hotel and Suites in Anaheim has traded hands in Orange County’s largest hotel sale so far this year.

Urban Commons LLC, a Los Angeles-based real estate investor, bought the 255-room hotel for about $26.3 million, according to brokers with the Newport Beach office of CB Richard Ellis Group Inc. who worked on the deal.

The sale works out to a price of about $104,000 per room for the hotel, which is next to the Disneyland Resort and its Downtown Disney District shopping center.

The property was sold by Irvine-based DKN Hotels.

It’s the first outright hotel investment for Urban Commons, according to Taylor Woods, who along with Howard Wu is one of two principals at the investor.

The company is also said to have invested in apartments and other residential deals.

Urban Commons is looking to buy several other hotels, according to Woods, who works out of Corona del Mar.

“We think the market timing is good, and we like this (property’s) location” near Disneyland, he said.

The hotel is at 1240 S. Walnut St., next to a Disney parking structure and a short walk from Downtown Disney. It has about 3,500 square feet of meeting space.

The hotel is Orange County’s 50th largest hotel by room count, and the 16th largest in Anaheim, according to the Business Journal’s rankings in May.

Rooms run from about $100 to $140 per night, according to the hotel’s website.

The hotel sold at a capitalization rate of about 8%, according to Rod Apodaca, senior vice president for CB Richard Ellis’ hotel brokerage group.

The sale is representative of the deals smaller hotel investors have been making in Southern California lately. The market has seen larger investors bid up the prices of bigger, non-distressed hotels to near-peak prices, said Apodaca, who worked on the deal with colleague Bob Kaplan.

The sale “was an example of the pent-up demand for quality mid-market product in Southern California,” Kaplan said.

Real estate investment trusts have been driving down the cap rates being paid for institutionally branded properties, and there are relatively few well-located, distressed hotel assets on the market, the CB Richard Ellis brokers said.

Smaller investors “can’t compete against the REITs” on price right now, Apodaca said.

The Holiday Inn deal is believed to rank as the largest hotel sale in Orange County so far this year, according to brokerage data, although a rumored deal for Dana Point’s St. Regis Monarch Beach Resort that’s said to be near closing would overtake that position by a wide margin.

Anaheim’s Holiday Inn Hotel & Suites was built in 1978 and has undergone a few renovations.

DKN Hotels—which also runs hotels in San Clemente, Newport Beach and Carlsbad, among other locations—reported spending about $7 million for an upgrade to the Anaheim hotel that finished up in late 2009.

The property’s set to be managed by Diamond Bar-based Brighton Management LLC under a new franchise license with Holiday Inn, according to the new owners.

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Mark Mueller
Mark Mueller
Mark is the Editor-in-Chief of the Orange County Business Journal, one of the premier regional business newspapers in the country. He’s the fifth person to hold the editor’s position in the paper’s long history. He oversees a staff of about 15 people. The OCBJ is considered a must-read for area business executives. The print edition of the paper is the primary source of local news for most of the Business Journal’s subscribers, which includes most of OC’s major corporate and community players. Mark’s been with the paper since 2005, and long served as the real estate reporter for the paper, breaking hundreds of commercial and residential real estate stories. He took on the editor’s position in 2018.
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