A potential sale of the Ritz-Carlton, Laguna Niguel appears to be on the back burner after the owner of the Dana Point luxury resort reached a truce with a large shareholder that had been pushing for the company to consider shedding assets.
Strategic Hotels & Resorts Inc., a Chicago-based real estate investment trust that owns the Ritz-Carlton, reportedly began exploring plans for a sale of some or all of its hotel properties last summer.
National reports said the company hired investment bank Eastdil Secured to market its portfolio.
Orange Capital LLC, one of the company’s larger shareholders, encouraged a sale. The New York-based investment firm manager last year said, “the best alternative to maximize shareholder value is for a sale of all the company’s assets.”
Strategic Hotels owns 18 high-end hotel properties in the U.S., Europe and Mexico that had an estimated combined value of about $3.5 billion last year.
The 396-room Ritz-Carlton, which sits on a 150-foot bluff overlooking the ocean, is the company’s only Orange County hotel. Strategic Hotels bought it from a privately held predecessor company in 2006 for $327.7 million, plus the assumption of $8.6 million in debt. The deal valued the property at nearly $850,000 per room.
Orange Capital began preparing for a proxy battle with the company late last year, citing disappointing earnings and stock performance, but an agreement struck this month giving the investment firm a voice on the company’s board ended that threat.
Strategic Hotels Chief Executive Raymond Gellein said this month that his company “will continue to evaluate all opportunities to enhance shareholder value,” but besides the $200 million sale of a Mexico property that closed in late February, there have been no reports that it’s still actively considering a sale of the Ritz-Carlton or other assets.
Strategic Hotels’ stock is up nearly 20% since last summer, and its shares now trade at levels not seen in more than five years. It currently has a market value of about $2.1 billion.
The local Ritz-Carlton is also seeing improved financial results, according to Strategic Hotels’ latest annual report released in February.
The Dana Point hotel ended last year with an average occupancy rate of 67% and an average daily rate of $398.30, up from 63.5% and $376.81 at the end of 2012.
Revenue per available room, a measure of performance for hotels also known as RevPar, stood at $266.82 for the Ritz-Carlton at the end of 2013, up nearly 11.5% from a year earlier.
Total RevPar—which also factors in food, beverage and other hotel operating revenue, along with a hotel’s daily rates—was nearly $575 at the end of 2013, up 12.2% from year-earlier levels.
Colliers Promotion
Colliers International has named one of its top local office brokers, Robert Caudill, to the newly created post of regional director for Orange County. He will remain based at the brokerage’s Irvine office and will be responsible for recruitment and business development, in addition to brokerage and investments responsibilities, the company said.
“His success in representing both landlords and tenants in dozens of different industries, coupled with his demonstrated management expertise, should prove invaluable to both our clients and brokers in Orange County,” said Colliers’ Western Region President Martin Pupil, who is also based in the Irvine office.
Meruelo Move
Downey-based Meruelo Group, a holding company involved in the real estate, construction, private equity and food services industries, has bought a small office at one of the busier intersections in the area around John Wayne Airport.
The company recently completed the purchase of a nearly 21,000-square-foot office at the Centerpointe office complex in Irvine, near Jamboree Road and MacArthur Boulevard.
CoStar Group Inc. records put the purchase price for 19752 MacArthur at $4.1 million.
Meruelo Group is expected to occupy a majority of the building for its own operations. The company is led by Alex Meruelo, the founder of the La Pizza Loca restaurant chain.
