In the biggest hotel deal in Orange County in over a year, a Los Angeles-based investor has bought the Hyatt Regency Newport Beach.
The 408-room property on 26 acres next to the Back Bay on Jamboree Road, was acquired late last month by an affiliate of a L.A.-based real estate investment and development firm Woodridge Capital Partners LLC, property records show.
The hotel is Woodbridge and Chief Executive Michael Rosenfeld’s only known OC investment.
Financial terms weren’t immediately disclosed. Woodbridge took out a $78 million loan to finance the deal, according to trade industry reports, or $191,000 per room.
It was sold by Aliso Viejo-based real estate investment trust Sunstone Hotel Investors Inc., which had owned it since 2002. The Hyatt was Sunstone’s only OC asset. It owns 24 properties overall and has a nearly $3.8 billion market value.
Sunstone valued the hotel at about $62 million, or roughly $152,000 per room, according to its latest annual report.
The hotel is subject to a ground lease through 2048. The owner of the underlying land is a Santa Ana-entity, and the ground lease is the main reason the sales price appears below other recent Newport Beach hotel deals. Sunstone’s last sale of an OC property, the 444-room Fairmont Newport Beach, was for $125 million, or about $282,000 per key.
Despite the discrepancy in value, CoStar Group Inc. records indicate the Hyatt Regency sale is the priciest OC hotel deal since the Fairmont sale in February 2017.
The Fairmont Newport Beach, which sits close to John Wayne Airport, has operated as Renaissance Newport Beach Hotel since a $30 million renovation by its China-backed owners.
A potential Hyatt Regency redevelopment is a possibility, according to trade publication Commercial Observer, though a time frame for any work hasn’t been disclosed. The company didn’t return calls for comment on the acquisition.
Century Plaza Redo
Woodridge is familiar with fixing up Sunstone’s Hyatt Regency hotels.
Its best-known property is the Century Plaza development on the Avenue of the Stars in its hometown. The site previously held a Hyatt Regency. The first phase of an estimated $2.5 billion mixed-use redevelopment that’s in the early stages will include the rebranding of the 19-story, arc-shaped hotel as a Fairmont Hotel and Resorts when it reportedly reopens next year.
Woodridge bought the Century City hotel from Sunstone in 2008 for a reported $367 million.
The Hyatt Regency Newport Beach currently operates under a management agreement with Hyatt that expires next year with options to renew, according to Sunstone’s annual report.
The hotel’s average daily rate was $159 late last year, up 2.7% year-over-year, according to Sunstone’s regulatory filings. It said it had a 74% occupancy rate in the last quarter of 2017.
The Hyatt Regency includes 43,000 square feet of indoor and outdoor meeting space, a restaurant, fitness center, three outdoor swimming pools, a tennis court and a nine-hole executive golf course.
Sunstone hadn’t disclosed sale details as of press time. The REIT plans to announce its second-quarter results this month.
