The sale price was not disclosed by the parties involved, however; the property's assessed value is $67 million and local hotel brokers tell GlobeSt.com the sale price was around $45 million, in part because the buyer acquired only the hotel, not the land, which comprises $20 million of the property's assessed value.
The partnership did say the asset was acquired at "a significant discount to replacement cost" and that a $4-million upgrade of the 21-story hotel is planned. The renovation will update the lobby and public areas, enhance the hotel's retail and food and beverage offerings and recapture several guestrooms currently utilized for other purposes.
Pan Pacific San Francisco is the first San Francisco property for Oxford, a private equity investment group and advisor focused on the hospitality sector. The San Francisco-based firm is currently responsible for a $1.1 billion portfolio of luxury and upscale hotels, conference centers and resorts.
The Whitehall Street Real Estate Funds are Goldman Sachs' primary investment vehicles for making privately negotiated real estate investments. The current Whitehall fund was formed in early 2001 with total committed capital of $2.5 billion, $550 million of which was committed by Goldman Sachs and its employees, with the remainder committed by institutional and individual investors.
Pan Pacific San Francisco is a Portman-designed hotel featuring a distinctive brick facade, an 18-story interior atrium, 14,000 sf of meeting space and one of the largest porte-cocheres in San Francisco. Oxford Lodging's SVP and Principal Mark Mutkoski says that although San Francisco has been one of the hardest hit hotel markets in the industry downturn, the acquisition fits nicely into the company's strategy of focusing on markets that "have high barriers to entry, low supply growth for the foreseeable future and above average growth potential off their cyclical lows."
The seller, Tokyu Corp., is Japan's biggest hotel operator. The corporation is the core member of Tokyu Group, an affiliation of more than 400 companies operating in the retail, urban renewal, tourism, and transportation industries.
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