Blackstone Pays $70M for Majority Stake in Parc 55

By Alex Girda, Associate Editor Parc 55 is the latest Bay Area hotel to attract institutional investors to one of the nation’s top hospitality markets. Last month, the Blackstone Group L.P. paid about $70 million for a 75 percent stake in the 1,011-key property located in Downtown San Francisco, Bloomberg News reported. Blackstone also obtained $152 million [...]

Parc 55 is the latest Bay Area hotel to attract institutional investors to one of the nation’s top hospitality markets. Last month, the Blackstone Group L.P. paid about $70 million for a 75 percent stake in the 1,011-key property located in Downtown San Francisco, Bloomberg News reported. Blackstone also obtained $152 million in debt financing from Archon Group LP., an affiliate of Goldman Sachs Group Inc.

The moves recapitalize a property that Rockpoint Group L.L.C. and Highgate Holdings Inc. bought six years ago for about $220 million, Bloomberg News reported. But the owners defaulted in February on a $211 million loan.  Rockpoint Group will invest about $10 million in new capital and retain about 23 percent of the hotel’s ownership. Highsgate Holdings will keep a 2 percent stake and stay on as the hotel’s management team.

For Blackstone, whose hospitality holdings include Hilton Worldwide, Parc 55 is the third hotel the private equity giant has acquired in the robust Bay Area market. During a typical week in March, occupancy rates for the area stood at 79 percent—significantly higher than the national average of 62 percent, according to figures from Smith Travel Research. Average room rates have also climbed 21 percent year over year to $166.39, compared to the national 3.6 percent increase to $104.65.