Sunstone Hotel Investors is selling the 821-room Hyatt Regency San Francisco to funds affiliated with Blackstone Real Estate for $279 million or approximately $340,000 per key. The transaction is expected to close next month or in August.
Located on San Francisco’s waterfront near the Embarcadero, Hyatt Regency San Francisco is one of the city’s largest convention and business-oriented hotels. The property is managed by Hyatt.
Sunstone deployed nearly $70 million of the sale proceeds into the discounted repurchase of its common and preferred stock during 2026. The company is evaluating additional opportunities to deploy the remaining proceeds from the sale in a manner that will provide shareholders with the best risk-adjusted return.
"We are pleased to announce the disposition of Hyatt Regency San Francisco and our ability to realize an attractive private market value for a lower yielding asset," CEO Bryan Giglia said in a statement. "To date, we have successfully redeployed nearly $70 million of the proceeds into the repurchase of our common and preferred stock, at discounts to net asset value and liquidation value. The sale is consistent with our strategy of more actively managing the portfolio to capitalize on higher private market values and recycle the proceeds into more accretive options on a risk-adjusted basis. While we have already generated value by deploying a portion of the proceeds, the remaining liquidity increases our flexibility and facilitates our ability to reinvest in a manner that will provide our investors with superior returns and greater per-share NAV growth. The Board and management remain committed to maximizing value for shareholders and pursuing any alternative that would reasonably be expected to result in value creation."
There has been investor interest in institutional-quality hospitality assets despite ongoing challenges facing some urban hotel markets. Large gateway-city hotels have seen improving performance as business travel, convention activity, and international tourism continue recovering. San Francisco remains one of the country’s most closely watched hotel markets. While the city has faced challenges related to office occupancy and convention demand since the pandemic, major hotels with strong locations continue attracting institutional investment.