EVP John Strauss of Jones Lang LaSalle, which brokered the deal, declined to discuss the price of the hotel, which sits on a bluff overlooking the Pacific Ocean. But Strauss tells GlobeSt.com that the Laguna Cliffs generated intense competition among prospective buyers and that the new owner, an institutional client of Cornerstone Real Estate Advisers, plans to invest considerably in upgrading and renovating the property.
Besides its 376 guest rooms with ocean views, the property features 50,000 sf of function space, a 14,000-sf spa, a 2,500-sf fitness center, two heated outdoor pools and a lighted tennis court. The hotel was renovated only five or six years ago, but Strauss tells GlobeSt.com that the new owner sees the potential to be even more competitive in the South Orange County coastal market via further improvements.
Market sources indicate that Cornerstone acquired the property from Prudential Real Estate Investors, which bought it for $82.4 million in September of 2004. The dramatic price increase in only three years underscores how rare and how much in demand coastal hotels are in Southern California, where lack of land and stringent development regulations all but prohibit the building of new properties.
Strauss tells GlobeSt.com that the Laguna Cliffs attracted wide interest from prospective buyers, with more than 20 qualified offers submitted from both domestic and international investors. He calls it one of the most competitively bid hotel offerings in Southern California in recent years.
"This demonstrates the overall health of the market and the strong investor appetite for high-profile assets like this in a market with such high barriers to entry," Strauss says. He also comments that the deal "demonstrates the liquidity in the hotel market" despite the problems that have occurred in the capital markets.
Investors also liked the fee simple offering and the fact that the property was offered unencumbered by a brand and management contract, according to Strauss. He says that Cornerstone will continue the property's affiliation with Marriott International, with property management by Interstate Hotels & Resorts.
Cornerstone will reposition the resort to compete more effectively with the collection of luxury resorts such as the Ritz-Carlton, St. Regis and Montage resorts. All three of those flags are within 10 miles north of the Laguna Cliffs on a stretch of coastline that has become known as California's Riviera.
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