L.A. Hotel Sells for $366M
- Jun 02, 2008
A little more than two years after acquiring the Hyatt Regency Century Plaza Hotel (pictured) for approximately $400,000 per room, Sunstone Hotel Investors Inc. has sold the property for $366.5 million–or approximately $505,000 per room–to Next Century Associates L.L.C. Sunstone acquired the hotel in October 2005 and implemented a $36 million improvement program that included conducting a major renovation, installing Hyatt as the new manager and positioning the hotel to maximize its appeal to both group and business travelers. As a result of the improvements made to the spaces and the additions of services including a health club and lounge, the hotel’s annual EBITDA nearly tripled in the company’s two-plus years of ownership, according to Sunstone information. Sunstone realized a total internal rate of return of approximately 19 percent upon sale, according to Sunstone statements. The 19-story hotel, located in Century City in Los Angeles, has 726 guestrooms and 85,000 square feet of meeting space. Century City was created in the early 1960s as a master-planned community on 176 acres that were originally part of the backlot of the 20th Century Fox Studios. A Next Century Associates spokesman said the location was attractive because of its status in the Century Plaza and its position within walking distance of new luxury residential towers, the Westfield shopping center, and 10 million square feet of office complexes in Los Angeles as well as the 2000 Avenue of the Stars across the street. “It is unusual for a property of this strategic location to become available. The prior owner had invested over $35 million in renovations to the property over the last two years to common rooms and guest areas,” Michael Rosenfeld, founder & CEO of Century City-based Woodridge Capital Partners and managing partner of Next Century Associates, told CPN. “The property was also coming off some long term contract business. With the hotel being recently renovated, it was seeing tremendous recent occupancy in the 88 percent range and the fact that the number of group contracts had come off were great economically … We were also able to take advantage of the dislocations in the broader real estate market, which made the ability to acquire even possible.” Sunstone Hotel Investors is a hospitality REIT that has interests in 45 hotels comprised of 15,354 rooms primarily in the upper-upscale segment operated under brands such as Marriott, Hilton, Hyatt, Fairmont and Starwood. Next Century Associates is a joint venture with an entity in the D. E. Shaw Group, a global investment and technology development firm.