San Clemente-based Sunstone Hotel Investors Inc. said it plans to buy the landmark Century Plaza Hotel & Spa in Century City for $293 million.
Sunstone said it plans to spend another $22.5 million to renovate the 728-room hotel and turn it into a Hyatt Regency. The company plans to borrow about $175 million to help fund the buy.
The Century Plaza underwent a $70 million makeover four years ago under a previous owner.
Sunstone plans to ink a long-term management agreement with Global Hyatt Corp. to manage the hotel.
Sunstone bought the hotel from Phoenix-based Pivotal Century Plaza Hotel LLC, a real estate partnership with $2 billion in holdings. The hotel, which opened in 1966, is currently managed by Starwood Hotels & Resorts Worldwide Inc. under the Westin name.
Robert A. Alter, Sunstone’s chief executive officer, said the deal makes for the third high-end hotel that his company has purchased under the Hyatt brand name. The others include the 403-room Hyatt Regency Newport Beach and the Hyatt Regency in Atlanta.
“It’s good for the market to not think of us as a one-trick pony,” said Alter, noting that 60% of Sunstone’s before-tax profits come from management contracts with Marriott International Inc.
The hotel buy is significant in Los Angeles because of its huge meeting and convention presence in western L.A.
The adjacent 260-room St. Regis hotel was purchased in January by a New York investment group for $193 million. That group plans to tear down the St. Regis and build condominiums, which stands to give the Century Plaza more opportunity to grab meetings business in L.A.’s Westside.
In July, Sunstone wrapped up the last piece of a six-hotel buy designed to expand the company to the east. Altogether, Sunstone paid more than $500 million for the six Renaissance hotels. Sunstone has made more than $1 billion in acquisitions since going public last year, Alter said.
Before the Renaissance deal, about 65% of Sunstone’s 54 hotels were in the West, with about half of those in California.
The Century Plaza deal is set to close in the fourth quarter. Sunstone will own 61 hotels when the deal closes.
Sunstone shares were down a fraction to $25 on Thursday.
