Le Meridien San Francisco Fetches $143M
- Dec 14, 2010
December 14, 2010
By Barbra Murray, Contributing Editor
Chesapeake Lodging Trust is on its way to becoming the new owner of the 360-room Le Meridien San Francisco, signing a deal to acquire the upper-upscale hotel from HEI Hospitality L.L.C. for $143 million.
Located in the financial district at 333 Battery Street and physically linked to the four million square-foot mixed-use Embarcadero Center, the 29-story Le Meridien is home to 13,000 square feet of meting space, a fitness facility and two restaurants. HEI submitted the 21-year-old property to a $10 million renovation after acquiring what was then the Park Hyatt from Strategic Hotel Capital L.L.C. four years ago. Financial terms of the 2006 deal were kept hush-hush but published reports at the time indicated that the hotel traded for approximately $126 million. Regardless, Chesapeake is picking up the hotel at a desirable price and, as company president and CEO James L. Francis notes in a prepared statement, “a significant discount to replacement cost.”
Chesapeake will finance the transaction, scheduled to close by December 31, with a hotel-secured $60 million term loan to be provided at closing, a $45 million borrowing under its revolving credit facility and proceeds from the company’s recent equity offering. The lodging REIT plans to continue to fly the Le Meridien flag at the property, having entered into an agreement with current operator and manager HEI Hotels and Resorts.
San Francisco has seen a few of its high-end hotels change hands this year. Pebblebrook Hotel Trust purchased the 476-room Sir Francis Drake Hotels from Chartres Lodging Group for $90 million and the 201-room Hotel Monaco jumped from Kimpton Hotels’ portfolio to that of LaSalle Hotel Properties in a $68.5 million transaction. And there is still time for someone to grab the 158-room Mandarin Oriental Hotel, which Cornerstone Real Estate Advisers recently put on the market.
According to Jones Lang LaSalle Hotels’ Hotel Intelligence Report, released in November, San Francisco is the fifth most liquid hotel investment market in the U.S.