An inhospitable market? LA’s biggest hotel sales plunge in 2020

https://therealdeal.com/la/2020/12/18/an-inhospitable-market-las-biggest-hotel-sales-plunge-in-2020/?utm_source=internal&utm_medium=after_article&utm_campaign=related_article

Large deals have been few and far between as investors wait out pandemic

Los Angeles December 18, 2020 08:50 AM
The Georgian at 1415 Ocean Avenue and The Viceroy at 9291 Burton Way (Google Maps)
The Georgian at 1415 Ocean Avenue and The Viceroy at 9291 Burton Way (Google Maps)

This was a bad year to sell a hotel.

Only two of the five biggest Los Angeles County hotel sales in 2020 would have made the cut for last year’s top five, according to an analysis of property records by The Real Deal.

The lack of big-ticket sales reflected a lack of deals period. There were 23 hotel transactions in the county in 2020, according to brokerage Atlas Hospitality Group. That’s a significant drop from 50 in 2019 and 48 in 2018.

A handful of the deals that did go down, said Alan Reay president of Atlas, were a result of “Project Homekey,” in which the state of California bought hotels to house the homeless.

Reay blamed the sales tailspin on market uncertainty caused by the pandemic, as state laws forced hotels to close down — and also gave lenders cold feet on hotel deals.

“It’s a wait and see situation,” Reay said.

A deal that would have come in at No. 2 on the list, the 502-key Renaissance Los Angeles Airport Hotel, which recently sold for $92.5 million, has not hit public records yet. The seller was Sunstone Hotel Investors and the buyer was not named.

Here are the five largest hotel sales that closed in L.A. County in 2020:

1. Viceroy L’Ermitage Beverly Hills | EOS Investors LLC | $100 million

How bad of a year was it for hotel sales?

Well, the top deal involved a property seized by the federal government.

Federal authorities seized Viceroy L’Ermitage at 9291 Burton Bay in Beverly Hills, alleging fugitive financier Jho Low bought the hotel in 2010 with money embezzled from the Malaysian government.

The winner of the August auction to buy the 116-room luxury hotel was EOS Investors, which the Wall Street Journal described as “a three-year-old firm that owns and manages about 20 hotels.”

Eugene Wang, president of EOS Investors, told the Journal that the property’s association with an international fugitive, “adds some mystery to the hotel.”

2. Georgian Santa Monica | BLVD Hospitality, GSM Hotel Owner LLC, ESI Ventures | $62.5 million

L.A.-based developer BLVD Hospitality led the purchase in August of the Georgian, an 87-year-old hotel that’s a block away from the beach, at 1415 Ocean Avenue.

Seller 4DS owned the 84-room, art deco, turquoise-colored hotel since 1991, but was approached by BLVD Hospitality about the purchase, according to the Los Angeles Business Journal. BLVD Hospitality converted the ACE Hotel in downtown L.A. into a live entertainment venue, and may do the same with the Georgian.

3. Days Inn Hollywood | Shamina Investments Inc. | $22.9 million

At No. 3, we’re no longer looking at trades of high-end hotels.

Shamina Investments Inc., a seven-year-old L.A. developer, purchased the 74-room hotel from Shaiu Trust, which property records link to Peter Shaiu, an Orange County investor. The deal closed in March.

4. Hilton Garden Inn Arcadia | Arbor Lodgings Partners Inc., GFH FInancial Group | $20.1 million

The 66-room hotel sale happened in February, before the pandemic swept the nation. The deal was one of several California hotel purchases by Arbor Lodgings, a Chicago-based company. The seller was New York City asset management giant Blackstone, which offloaded other parts of its hospitality portfolio in 2020.

5. Elan Hotel Beverly Grove | Kamla Hotels | $13 million

The final deal to round out the list also closed before Covid-19 hit the states. Cerritos-based hotel management company Kamla purchased the 50-room hotel in January from L.A. company, OSM Investments. The hotel was last sold in 2007 for $10 million.

About the author