Aliso Viejo-based hotel owner Sunstone Hotel Investors Inc. has called off plans to buy Southern California’s largest hotel, the 1,625-room Manchester Grand Hyatt in downtown San Diego.
The company, which owns all or part of 30 hotels, had made a bid to acquire the hotel from developer Doug Manchester, who owns the Grand Hyatt and has been looking to sell his stake.
In an e-mail to the San Diego Unified Port District, the Grand Hyatt’s landlord, Manchester’s lawyer said a deal with Sunstone had been terminated.
Sunstone apparently made “material changes” to the terms of the initial agreement and, as a result, negotiations ended, according to reports.
The deal was estimated to be worth about $580 million. Manchester was expected to get a minority stake in Sunstone if the company ended up buying the hotel.
The San Diego Unified Port District was set to take up the proposed deal this month.
Sunstone has been aggressively seeking out hotel buys in the past several months.
The company acquired the Royal Palm hotel in Miami Beach last month with plans to renovate the beachfront property.
Sunstone bought the 409-room hotel for $126 million at a foreclosure auction.
The company has been on the hunt for acquisitions but “will continue to carefully pick our spots and will not rush to acquire assets,” said Art Buser, chief executive at Sunstone, in July.
Like several buyers looking to pick up assets at discounted prices, Sunstone has run up against a valuation gap where owners are reluctant to sell, holding out instead for higher prices in anticipation of a recovery.
In an attempt to work around this, Sunstone says it’s been exploring hotel debt and portfolio deals.
