Orange County hotel sales last year dropped back to 2003 levels, with 29 hotels changing hands compared to 35 in 2004.
That’s according to preliminary 2005 sales data from Irvine-based Atlas Hospitality Group.
Topping the list in sales price last year was the 435-room Sutton Place Hotel, which was sold for $72 million by Newport Beach-based Tarsadia Hotels Inc. to Sunstone Hotel Investors Inc. of San Clemente.
The hotel since has been rebranded a Fairmont and is undergoing a $22 million renovation, expected to be completed later this year.
Work includes a redesigned lobby and public areas and the addition of a spa. Some meeting space and all guest rooms are getting a makeover.
The Fairmont Newport Beach is the company’s fifth California hotel. Others are in San Francisco, Los Angeles, Sonoma and San Jose.
Toronto-based Fairmont Hotels & Resorts Inc. recently was acquired by Saudi Prince Alwaleed bin Talal’s Kingdom Hotels International and Los Angeles-based Colony Capital LLC.
The two companies agreed to pay $3.9 billion for Fairmont. Colony Capital, which finalized a deal for Raffles Holdings Ltd.’s hotel business for $1.7 billion in September, will combine Fairmont with Raffles Hotels to create a big international luxury chain.
That acquisition shouldn’t affect the Newport Beach hotel, since Fairmont is set to continue managing it, said Alan Reay, president of Atlas Hospitality.
The second-largest sale last year in OC was the 230-room Hilton Suites Anaheim.
The business hotel was sold by Beverly Hills-based Hilton Hotels Corp. to RLJ Urban Lodging Fund LP, an affiliate of RLJ Development LLC in Bethesda, Md.
The Hilton Suites was part of a three-hotel sale for $72 million. Hilton Suites accounted for an estimated $23 million of that sale.
RLJ also owns the Residence Inn in Garden Grove and Residence Inn San Diego Mission Valley.
The company recently announced plans to bolster its hotel holdings to 100 this year. RLJ is controlled by Robert L. Johnson, founder of Black Entertainment Television, now a unit of Viacom Inc., and the owner of the NBA’s Charlotte Bobcats and WNBA’s Charlotte Sting.
The third-biggest sale in OC was the 184-room Woolley’s Petite Suites in Santa Ana. It was bought by New York-based Blackstone Group LP for $14 million.
Blackstone in January also acquired Dallas-based LaQuinta Corp., which now has assumed management of the former Woolley’s.
The Blackstone Group is a private equity firm whose real estate group has raised $10 billion in funds, primarily to fund acquisitions of hotels and other commercial real estate.
Last month, Blackstone acquired Bethesda, Md.-based Meristar Hospitality Corp. for $2.6 billion.
Meristar owned and operated 57 hotels, including the Irvine Marriott. The 2004 purchase of the Irvine Marriott by Meristar for $92.5 million was the largest OC sale that year.
Rounding out the top five OC hotel deals in 2005 were the 103-room Holiday Inn Express in Garden Grove, which sold for $12 million, and the 142-suite Hawthorn Suites in Orange, which traded hands for $10.5 million.
The Holiday Inn Express opened in 2003. It was built during a $54 million redevelopment project along Harbor Boulevard.
Grace Yoon of Colliers Seeley International Inc.’s Anaheim office represented the seller, Parkcrest Development Corp., a Sacramento-based developer. The buyer was Kaon Investments LLC, which was represented by Charles Dunn Co.
Hawthorn Suites was sold by an undisclosed East Coast investment group to Orange Hospitality Group LLC and Lost Hill Motel Investments LLC.
Thompson Calhoun Fair LLC of Atlanta and Maxim Hotel Brokerage Inc. of Newport Beach advised the seller in the deal. The hotel was built in 1988 as a Woodfin Suites and converted to a Hawthorn Suites in 1998.
Based on the preliminary sales data, the top two sales for 2005 totaled $103 million, compared to $173 million for the top two sales in 2004.
OC also trailed other Southern California counties on some measures.
In Los Angeles, the 1,011-room Marriott LAX alone brought $136 million. In San Diego, Strategic Hotel Capital of Chicago bought a 45% stake in the Hotel del Coronado, giving the hotel a value of more than $700 million.
“Sellers are trying to reap profits as they believe they may be near or at the top of the market,” Reay said.
