Orange County Business Journal
Anaheim’s Sheraton Park Sells for $51M
HOSPITALITY: LATEST CHANGE TO CONVENTION AREA
By Katie Murar
One of Orange County’s largest hotels, located on the Anaheim Convention Center campus, is set for a facelift after a recent sale.
The deal and upcoming work to the property, along with other luxury offerings being built nearby, marks another sign of significant upgrades and investments to the epicenter of OC’s meetings and conventions business.
The 486-room Sheraton Park Hotel at Anaheim Resort sold for a reported $51 million; it’s No. 4 among the largest hotel deals in OC over the past year by total price.
The new owner is Taconic Capital Advisors LP, a New York-based institutional investor. The price works out to $105,000 per room—low when set against recent comps, according to Alan Reay, president of Irvine-based hotel broker and consultant Atlas Hospitality Group.
Nearby hotels along Harbor Boulevard have sold for $340,000 per room in the past year.
Sources indicate the affordable acquisition is largely due to a ground lease with the city of Anaheim that expires in 2068, which currently runs about $1.5 million a year. The Sheraton’s beleaguered backstory also plays a part.
The 13-story hotel last sold in 2013 when CWCapital paid about $36 million to take over the Sheraton, which at the time carried $88.5 million in debt.
The latest sale marks a 41% premium for the seller, one of the country’s largest asset managers and special servicers for distressed real estate properties.
According to CoStar Group Inc. records, CWCapital also owns Portofino Inn & Suites—essentially next door to the Sheraton—which it bought two years ago.
CWCapital bought the 190-room hotel for $26 million; prior owners had fallen behind on a $36 million loan.
No. 12 by Size
The Sheraton is OC’s 12th largest hotel by room count and No. 22 by meeting space (see list, page 27). It’s run by Aimbridge Hospitality, part of Interstate Hotels & Resorts.
It was built in 1971 and last saw a major refresh some 15 years ago, according to brokerage data. That’s roughly double the time that major hotels typically see in between largescale upgrades. As of four years ago, the hotel was appraised at $56.4 million, according to prior news reports.
Sheraton is an 80-year-old legacy flag that had fluttered lower over the years; one industry observer in 2018 called it “bland, boxy and boring … squarely positioned in the past.”
Bethesda, Md. parent, Marriott International Inc.—the largest hotel operator globally with 7,200 properties in 134 countries spanning 30 brands—pledged at the time to change that.
Marriott CEO Arne Sorenson called revitalization “a top priority” and Sheraton hotel owners committed more than $500 million to renovations.
Upgrades discussed portfolio-wide include a “town square” feel to lobbies; “collaboration suites”—partially enclosed meeting areas—and a “coffee bar bar” serving coffee by day and alcohol at night.
Other OC-based hotel owners and operators are also revitalizing Sheratons.
Newport Beach-based Eagle Four Partners, which in OC owns Paséa Hotel & Spa, Balboa Bay Resort, Balboa Bay Club, and Newport Beach Country Club, bought the Sheraton Denver Downtown in 2018—the 1,200-room hotel had been appraised at $415 million—and is putting $80 million into a revamp.
Taconic Capital, an opportunistic investor known for targeting distressed commercial properties, is planning “a full-scale transformation and fresh perspective of the new Sheraton brand” for the just-bought site in Anaheim.
“We are proud to take ownership of this great hotel,” said Taconic Director Eric Sitman. Taconic is “delighted [to be] investing back into the hotel and in its future.”
Property improvement benchmarks and industry sources point to an investment of at least $20 million to $30 million on the renovation.
The property is near the corner of Harbor Boulevard and Convention Way, next to a Morton’s The Steakhouse and the Hilton Anaheim, OC’s largest hotel by room count and meeting space.
The Sheraton Park has nearly 32,000 square feet of meeting space, three dining options and a pool deck.
General Manager Ian Gee said “planning and design will be the focus” this year.
“We’re excited to be working with a committed and visionary owner,” he said.
Gee noted its “fantastic location—walking distance to Disneyland and next to” the convention center.
The latter fact gets more salient when meetings and convention pros include a look at the under-construction Westin Anaheim Resort, on the opposite end of the ACC campus, facing Katella Avenue and Disneyland Resort.
The 613-room property is the largest hotel under construction locally and slated to open in August.
Earlier estimates pegged the Wincome Group project at $250 million; plans call for a lobby bar and restaurant, pool and rooftop bar; and three leased restaurants and retailers upfront: Fleming’s Prime Steakhouse and Wine Bar, Galamar Marketplace; and a third OC site for Puesto, a San Diego-based “Mexican artisan kitchen” with a location in the Los Olivos Marketplace in Irvine and one in the AC Hotel Irvine not far from John Wayne Airport.
The Westin, also a Marriott flag, will have some 47,000 square feet of meeting space when it opens, which would place it No. 13 on this week’s list.
The Westin’s development a few years ago came as the city pursued higher-end properties in and around the resort area.
The “four-diamond level” quality luxe offering and Sheraton revamp join two solid—and massive—business class hotels in the shadow of the Convention Center: Hilton Anaheim with 1,574 rooms and 150,000 square feet of meeting space, and Anaheim Marriott with 1,030 rooms and 114,000 square feet of event real estate.
Combined, the four properties will have more than 3,700 rooms and close to 350,000 square feet of meeting space on a campus that a few years ago wrapped its own $200 million expansion and upgrade—adding 200,000 square feet of space, dubbed ACC North, to top 1 million square feet, all-in.