GlobeSt.com UPDATE: Two Major Hotel Deals Close

SAN DIEGO-It was a big day in the local hotel scene as the previously announced sale of two major properties closed. The Hotel del Coronado and the San Diego Marriott Del Mar met new owners yesterday.Strategic Hotels & Resorts acquired a 45% joint venture ownership interest in the Hotel del Coronado . Kohlberg Kravis Roberts & Co. holds a 41% stake, while KSL Resorts counts the remaining 14% of the luxury hotel.Officials from Strategic Hotels were unavailable for comment, but in a company statement the firm announced that the “market value of the new joint venture was $745 million,” while Strategic’s total equity investment was some $70 million.As reported earlier on Globest.com, Orlando-based sold CNL Hotels & Resorts its stake in the historic property after a two-year hold. CNL sold its share of the hotel for a reported $165 million.The property “outperformed our expectations,” says Thomas J. Hutchison III, CEO of CNL. Hutchinson adds that the Hotel del Coronado reached “a targeted level of profitability three years ahead of our projections.”CNL picked up the property in December 2003, along with New York-based Kohlbergh Kravis Roberts & Co. and La Quinta-based KSL Resorts. The partnership paid an estimated $385 million to Los Angeles-based Lowe Enterprises Investment Management LLC.In the second deal, Sunstone Hotel Investors Inc. acquired the 284-room San Diego Marriott Del Mar. The San Clemente-based firm paid $69 million, or $243,000 per room. The previous owner, JMI Realty, developed the property in 2002. Marriott International will manage the site. As part of the deal, Sunstone closed on a fixed-rate loan totaling $48 million at 5.69%.According to Robert A. Alter, Sunstone’s CEO, the property is located within San Diego’s highest office rent submarket. “This acquisition advances our strategy of upgrading our portfolio through the addition of premium full service assets in high barrier to entry markets.”Alan X. Reay, president of Costa Mesa-based Atlas Hospitality Group, says there is good reason these deals are happening as the San Diego hotel market is among the strongest in the country. He tells Globest.com “prices are up all over California, but particularly in San Diego.”