Irvine-based Pacific Hospitality Group should make a big profit off the planned sale of one of its high-end properties.
The hotel operator and investor, whose portfolio includes 11 U.S. hotels, recently listed the Bacara Resort & Spa in Goleta for sale. The 360-room resort is in south Santa Barbara County.
Brokerage firm Hodges Ward Elliott has the listing for the 35-acre beachfront property, the company confirmed in local news reports this month.
The resort is known for catering to celebrity guests and those willing to pay as much as $10,000 a night for some of its largest suites. It has a 2,000-square-foot spa and wellness center and 70,000 square feet of meeting space.
Privately held Pacific Hospitality and investment partners paid a reported $185 million for the property in 2013. They put in an estimated $25 million in upgrades.
The resort was appraised at about $221 million in 2014, says Alan Reay, president of Irvine-based Atlas Hospitality Group.
Reay estimates the Bacara could sell for close to $250 million this time, or roughly $700,000 per room.
Pacific Hospitality paid close to $515,000 per room in 2013.
“In a strong market like we are seeing, (a potential sale) is not unusual,” Pacific Hospitality Chief Investment Officer Kory Kramer told Santa Barbara publication Noozhawk this month.
“The significant improvements that PHG made to the resort has increased its value, therefore opening the door to new opportunities,” he said.
Sales have been rare for Pacific Hospitality. Kramer told the Business Journal last year after the acquisition of a soon-to-open AC Hotel in the Park Place mixed-use campus in Irvine that the company planned to be “long-term holders of assets.”
The Bacara falls under its Meritage Collection of upscale properties, which also includes Paséa Hotel & Spa in Huntington Beach, the Balboa Bay Resort in Newport Beach, and Meritage Resort & Spa in Napa.
Pacific Hospitality co-developed the ocean-view Paséa in a venture with Newport Beach-based R.D. Olson Development. The 250-unit luxury hotel, part of the Pacific City development near the Huntington Beach pier, opened last May.
The hotel is already among the best-performing in R.D. Olson’s portfolio, Chief Executive Bob Olson told the Business Journal last month.
Richard Pickup’s Irvine-based private equity company, Eagle Four Partners, also was a co-investor in Pacific Hospitality’s 2013 buy of the Bacara, along with Bill Foley, former chief executive of then Anaheim-based Carl’s Jr. and title insurer Fidelity National Financial. Foley owns vineyards in Santa Barbara.
Eagle Four also is a co-investor in at least one other Pacific Hospitality property, the Balboa Bay Resort.
Sale Center?
Institutional investors have taken a step back in Orange County’s office market over the past few months but could be tempted to jump back in if they heed the advice of Irvine-based online real estate brokerage Ten-X.
A report by Ten-X this month listed OC among the top five office markets in the U.S.—along with Portland, Oakland, Palm Beach and Miami—in which investors should consider buying office assets.
“These regions, concentrated in Florida and the West Coast, are being fueled by growing economies, where strong demographics and consistent job growth are fueling robust demand for office space,” Ten-X said.
For OC in particular, “healthy demand and sporadic completions are expected to carry the growth through 2018 before a slight pullback, though a healthy economy should keep the market appealing for investors,” the report said.
Average monthly rents here are projected to increase from the current $1.98 per square foot to nearly $2.13 per square foot by 2020, up 7.8%, the report projects.
Ten-X also projects roughly 5.4% annual net operating income growth for OC office properties through 2018.
The top five markets where market conditions might cause office investors to consider selling their properties are Houston, Cleveland, suburban Maryland, Memphis and Milwaukee, the report said.
