"The top of Nob Hill, it doesn't get any better as far as location," Alan Reay, president of the hotel brokerage firm Atlas Hospitality Group, tells GlobeSt.com. "I think the $160- to $170-million range would be a good guess."
Cia Buckley, head of JER's US fund business, says plans for the hotel include a substantial renovation to all guestrooms, revitalization of the lobby, lobby lounge, restaurant, and meeting space, refreshing of the corridors, installation of improved back-of-house administrative systems, and more visible external signage. Jim Kauffman, EVP of Marriott International, says the hotel will be continue to be managed by Marriott International of Washington, DC, and will continue to operate as a Renaissance.
Another well-located hotel, the much larger Westin St. Francis on Union Square, which is surrounded by luxury retailers, sold in June 2006 for $368,000 per key. In theory, a smaller hotel in a similarly prime location such as Nob Hill would be substantially more per key. That combined with the fact that values have gone up by as much as 20% in the past year is why the estimates of the Renaissance Stanford Court deal are coming in above $400,000 per key, Reay says.
In May 2006, the 360-room Park Hyatt in the Financial District sold for about $135 million, or $375,000 per key, and was re-branded a Le Meridien. In April 2006, the 338-room Pan Pacific San Francisco Hotel changed hands for $95 million, or $281,065 per key, and re-branded the property a JW Marriott hotel. In March, the 690-room Argent hotel on Third Street between Market and Mission was sold for $178 million, or $258,000 per key.
Earlier this month, the 803-room Hyatt Regency within the Embarcadero Center development in Downtown San Francisco changed hands. The parties involved did not reveal the price. Some reports estimated $200 million, but Reay says that would be very low given the other comparables and the fact that the property sold for $180 million in 1998.
Although the final numbers are still being calculated, Reay tells GlobeSt.com that that 2006 will go down as the biggest year the California hospitality market has experienced since his firm began tracking the state 15 years ago. The rough totals are 380 transactions with a combined value well in excess of $3 billion, he says.
In large part because most of the biggest and best hotels changed hands in 2006 the value and number of hotel sales both are expected to slow in 2007. It hasn't slowed yet, however. In addition to the Renaissance Stanford Court and the Hyatt Regency, the 1,009-room Renaissance Parc 55 is expected to change hands in the very near future and Crowne Plaza and Palomar hotels recently went on the market, according to local brokers.
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