November's first half sees steady hotel transaction climate

16 Nov, 2012 By: David Eisen


The Sofitel Chicago Water Tower was picked up by Blackstone Group earlier this month.

While September and October were marked by trophy transactions, including the Essex House in New York by Strategic Hotels and Resorts, and two W properties, in Los Angeles and Chicago, the first half of November, while less eye-popping, has been steady on the deal front.

Earlier this week, word came the Sofitel Chicago Water Tower had changed hands, acquired by Blackstone Group, which cut an agreement with the Sofitel's previous owners, GEM Realty Capital, Goldman Sachs Group's Whitehall real estate funds and Accor SA. The previous owners purchased the property in 2006 for $105 million and put $160 million in mortgages on it. Then, this year, Sofitel picked up $85 million of the Sofitel's debt at a discount.

Unrelated, Blackstone Group LP, Centerbridge Partners LP and Paulson & Co. plan to sell $3.5 billion of debt to refinance their 2010 purchase of Extended Stay Hotels, enabling them to recoup about half their equity investment, according to Bloomberg.

On the New York front, Alfa Development acquired the Hotel Grand Union in Midtown South for $28.6 million, or just under $320,000 per room. Alfa reportedly will not rebrand the 90-room hotel and has enlisted Marshall Hotels & Resorts to manage the property. Alfa also plans to upgrade the hotel’s booking software and is considering renovations to the rooms and lobby.

The acquisition can only be described as good for Alfa as New York continues to show gains in occupancy and average daily rate. It also bought in an up-and-coming area for hotels, where nearby hotels include The Setai, Gansevoort Park Avenue, Ace Hotel, NoMad and The Carlton.

Over on the West Coast, deals were getting done as well. DiamondRock Hospitality acquired the Hotel Rex, located in the Union Square district of San Francisco, for $29.5 million. The hotel is managed by Joie de Vivre Hospitality. It is DiamondRock's first acquisition in San Francisco. "With no supply on the horizon, we believe San Francisco can achieve several years of outsized growth," said Mark W. Brugger, DiamondRock CEO.

The 94-room Hotel Rex was originally built in 1907, and opened as the Hotel Rex in 1996 with 94 rooms, including two suites.

In resort news, Sandals Resorts expanded its reach to Grenada after it acquired LaSource. The resort will be renamed Sandals LaSource Grenada and will have 100 rooms added to become a 200-room property. LaSource had been closed since mid-October due to financial difficulties.

The Grenada resort will be the 14th in the portfolio of the Jamaica-based company, following what Gordon ‘Butch’ Stewart, chairman of Sandals, said was a nearly 12-year search "to grow our roots in the Spice Island."

Though not yet complete, DLF, India's largest property developer, said it would, after much back and forth and deals undone, sell its Amanresorts chain by the end of December.

'We are closing the deal in the next few weeks. We hope we would be able to announce it in the current quarter,'' CFO Ashok Tyagi said, adding that DLF expects to close the deal by January 2013.

The Amanresorts assets for sale include 22 hotels in 12 countries, except the property in New Delhi, which DLF will hold onto.

Back in January, a deal for the chain with China's HNA Group was thought to have been in place, but it fell through when HNA Group backed out.

DLF was expecting to sell Amanresorts for at least $400 million. Bids for the chain came in the $300- to $315-million range.


Topic : Hotel Acquisitions, November
External Source : Bloomberg

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