The Hilton Irvine/Orange County Airport has been sold to a San Jose-based investor.
An affiliate of DiNapoli Capital Partners last month closed on the purchase of the Hilton Irvine, a 302-room hotel across the street from John Wayne Airport on MacArthur Boulevard.
Terms of the deal were not immediately disclosed, but sources estimated the hotel traded hands for nearly $53 million, or about $175,000 per room.
The hotel was sold by The Blackstone Group. The New York-based private equity firm acquired the 10-story property in 2006 as part of a $2.6 billion portfolio acquisition.
The buyer took out a $38.75 million loan from OneWest Bank to fund the deal, according to property records.
It is the first hotel purchase in Orange County for DiNapoli, a privately held firm that also invests in apartments, offices and senior housing.
The company’s largest hotel is the 693-room Hyatt Regency Phoenix, which it bought in 2008 for a reported $96 million. Its last major reported hotel deal was the sale of the 234-room Hyatt Place in San Jose for $43 million in November.
The buyers haven’t disclosed plans for Hilton Irvine—the fourth-largest hotel in Irvine by room count—in terms of renovations or management changes. DiNapoli officials could not be reached for comment last week.
The hotel is managed by Interstate Hotels & Resorts under an agreement that can be cancelled upon a sale, according to marketing materials for the property.
“Investors have the opportunity to install their management company of choice to assist in future value creation,” according to marketing materials from brokerage HFF.
The hotel was built in 1985 and got a $6 million facelift about seven years ago. Hilton Irvine, in addition to its 302 rooms, has 25,000 square feet of indoor and outdoor meeting space. The hotel’s occupancy averaged nearly 79% between 2009 and 2013.
The property sits on 6.4 acres and includes parking for 400 cars.
Pricing, Activity Up
The estimated $53 million purchase price would put the deal among Orange County’s five largest hotel sales of 2014, according to brokerage data.
The largest local hotel sale of 2014 was the St. Regis Monarch Beach in Dana Point, which sold for $316.9 million.
Sales of hotels are generally up by number of deals and price across the state, according to Alan Reay, president of Irvine-based consultancy Atlas Hospitality Group.
2014 “was a record year in terms of transactions,” said Reay, whose company tracks hotel sales throughout California.
Pricing on a per-room basis is now higher than it was in 2007 and 2008, just prior to the last downturn, he said.
The average hotel sale in Southern California ran about $121,000 per room as of mid-2014, while Orange County hotels were trading hands around $100,000 per room, according to Atlas Hospitality data.
The replacement cost for the Hilton Irvine was estimated to be about $225,000 per room, according to HFF marketing materials.
The estimated $175,000-per-room sale price that DiNapoli paid likely falls short of that replacement cost because the hotel’s employees are unionized, which isn’t the case for many of the area’s larger hotels, Reay said.
The Hilton Irvine ranks No. 32 among Orange County hotels in terms of room count, according to Business Journal data.
The city’s largest hotel by room count is the Hotel Irvine, which has 536 rooms.
