Luxury Hotel Fetches $95M; $10M Upgrade Planned

SAN FRANCISCO- The Dallas-based hotel REIT Ashford Hospitality Trust Inc. has agreed to acquire the 338-room Pan Pacific Hotel San Francisco for $95 million or $281,000 per key. The transaction is expected to close within 45 days. The seller is a joint venture of Whitehall Street Global Real Estate Limited Partnership 2001 and Oxford Lodging Advisory & Investment Group LLC that reportedly acquired the property in 2003 for under $50 million.

Built in 1987 at the corner of Post and Mason Streets in the Union Square district, the hotel has 17,000 sf of meeting space, a conference center and two food and beverage facilities. On the heels of a $3.8-million renovation in 2004, Ashford officials say the hotel will see another $10 million in improvements and be rebranded “with a well known luxury flag.” The renovations, consisting of “revenue-enhancing” upgrades to meeting space, rooms and food and beverage facilities, will push Ashford’s all-in cost to more than $310,500 per key.

The property generated revenues of $25.5 million for the calendar year 2005. On a trailing 12-month basis, the purchase price equates to a (net operating income) cap rate of 3.9%. On a forward twelve-month basis, the purchase price equates to a (net operating income) cap rate of 6.5%.