Orange County hotel sales are back.
Nineteen hotels changed hands in the first half of the year, versus 13 a year earlier, according to Costa Mesa-based Atlas Hospitality Group. That’s the highest six-month total since 2001.
Atlas President Alan Reay said the pick up in hotel sales comes from pent-up investor demand since 2001 and a positive economic outlook.
“Room rates and occupancy are up across California, except in San Jose,” Reay said. “Major investors are seeing hotels as the last bastion of good deals in commercial real estate.”
Los Angeles County led the Southland in total sales, with 41 hotels sold this year compared to 32 a year earlier.
Orange County hotels brought in the highest median sales price, at $4.5 million, up from $3.2 million last year. California’s overall median sales price was $3.1 million.
Orange County posted a 151% jump in total sales to $174 million in the period,the highest percentage increase of San Diego, L.A., Riverside and San Bernardino counties. Orange County trailed only L.A.’s $445 million in total sales.
The largest sale in the county was the 489-room Irvine Marriott, which Arlington, Va.-based Meristar Hotels & Resorts picked up from Irvine-based Cigna Hotel Associates I LLC for $92.5 million in June. Meristar is one of the nation’s largest hotel real estate investment trusts.
Cigna Real Estate Investors of Hartford, Conn., was the managing partner of Cigna Hotel Associates. The owners had set a sale for 2001, but were put off after the terrorist attacks hit the hotel market, said Bernie Murphy, an executive with The Plasentia Group in Encinitas, which represented Cigna Hotel Associates in the sale.
“(The hotel) has been a strong performer for a long time,” Murphy said. “The fundamentals of Irvine are still great.” At the time of the sale, Meristar Chief Executive Paul Whetsell cited an improving business travel market, higher room rates and operating margins at the company’s similar hotels as reasons for the buy.
Meristar almost immediately announced public space and meeting room renovations for the hotel. Work is set to begin this week.
In Laguna Beach, the $17.6 million purchase of Aliso Creek Inn by Montage Resort & Spa was the second-biggest sale in the county.
Highest Sale Per Room
The Aliso Creek sale was the highest-priced deal in the county at $284,468 per room. It was the second highest in the state among hotels with a selling price of $5 million or more.
The 62-room Aliso Creek Inn includes a nine-hole public golf course, a clubhouse and the Canyon Lodge American Grill restaurant. There has been speculation that the Montage will expand the golf course to 18 holes, but the new owners haven’t given specific plans for the property.
A similar-sized hotel, the 64-room Argyle Hotel in West Hollywood, brought in the highest price per room in the state at $289,063.
The third biggest OC sale in the first half of the year was the 225-room Fullerton Marriott at California State University, Fullerton. That hotel was sold last January for $11.9 million by Host Marriott Corp. of Bethesda, Md., as part of a $70 million sale of several hotels.
The buyer was a joint venture group comprised of HEI Hospitality and Greenfield Partners LLC, both of Norwalk, Conn.; and GIC Real Estate Pte Ltd., the real estate investment arm of the Government of Singapore Investment Corp.
Boston-based J/Brice Design International Inc. has been hired to revamp the interiors of all hotels in the Host Marriott sale. Renovations to public spaces, meeting rooms, rooms and corridors are expected.
Rounding out Orange County hotel sales of $5 million or more for the first half of the year:
n The 122-room Hampton Inn & Suites Santa Ana, which sold for $7.9 million
n The 135-room Fairfield Inn in Buena Park, which sold for $6.2 million
n The 101-room Comfort Inn & Suites Anaheim West, which sold for $5.8 million
In Los Angeles, where the number of sales increased by 37%, the largest sale was the 637-room Renaissance Hotel in Hollywood for $88 million.
