SANTA MONICA, CA-Lighthouse Investments and developer Paligroup have teamed to purchase the historic 38-room Embassy Hotel at Third Street and Washington Avenue for $18 million. The renamed and revamped Palihouse Santa Monica is expected to debut this summer.

The property was originally built in 1927 and was granted historic landmark status in 2001 by Santa Monica. It boasts Moorish-influenced Mediterranean revival architecture, elements of which will be retained under new ownership. Owners, which include a local private equity group that was not named, declined to state the anticipated construction costs of the renovation or the sales terms.

The new version of the hotel will have 36 rooms and include the “Palihouse Lobby Lounge,” a café by day and a curated lounge menu for the afternoon and evening. The hotel is located just a few blocks east of the Santa Monica beaches and near the city's major shopping district.

"I didn't choose the property as much as the property chose me," Paligroup founder Avi Brosh tells GlobeSt.com. "I was brought into the deal by Ramin Kolahi of Lighthouse Investments and when I toured the property with him I knew instantly it was perfect for the Palihouse brand - plus it's widely known that Santa Monica is one of the best hotel markets in the country due to both its location, strong business and leisure demand drivers, and general significant barriers to entry."

Palihouse Santa Monica anticipates four room categories, ranging from 300 square feet (dubbed “Classic Guest Suites”) to 2850 square feet for a two-bedroom residence. Most of the rooms will have fully-equipped kitchens, separate vanity rooms, walk-in closets and 40-inch Samsung flat screen televisions. Custom furniture by Brosh and his design team will also be a part of the décor. Opening rates will range from $350 to $1,500 per night.

Paligroup operates two other hotels in the Los Angeles area, Palihouse West Hollywood and Palihotel Melrose.

The property was marketed by CBRE Group, Inc.'s Rob Apodaca and Bob Kaplan of CBRE Hotels, while Laurie Lustig-Bower and Kamran Paydar represented the seller.

Joint venture equity and debt financing for the acquisition and renovation of the property is being handled by Tim Meier, Nicholas White and Scott Eschelman of Preferred Capital Advisors.