Loews Hotels & Resorts Sets Foot in San Francisco
- Feb 18, 2015
Barbra Murray, Contributing Editor
It will be a first for Loews Hotels & Resorts. The lodging company will enter the San Francisco market with the planned acquisition of the 158-key Mandarin Oriental San Francisco in the city’s bustling Financial District. Loews is remaining mum on the price tag, as is the seller, Gem Realty Capital, which had acquired the property in 2012 for $63 million.
Loews has had its eye on San Francisco for quite a while, and for good reason. But it’s not just about establishing a footprint in the city simply because the company doesn’t have one; it’s also about the market.
“San Francisco, by any calculation, is one of the most important strategic leisure and commercial destinations in the country, Paul Whetsell, president & CEO of Loews, told Commercial Property Executive. “It’s certainly the gateway to the West, and important to Asia and so forth, but it’s just a vibrant city. It has all the demand generators we’re looking for.” It’s a list of drivers that includes a notable corporate base that is being buoyed–once again–by the high-tech sector; the 700,000-square-foot Moscone Convention Center; and a successful tourism business. “I will tell you right now, I think San Francisco is one of the top three lodging markets in North America,” Whetsell added
The Mandarin Oriental features five-star accommodations, 5,000 square feet of meeting space and an 8,000-square-foot spa and fitness center–and if the offerings and brand aren’t prominent enough, the building certainly is. The hotel makes its home on the top 11 floors of the 48-story 345 California Center, which holds the distinction of being the third tallest office tower in San Francisco.
Snapping up such a hotel is no simple feat; competition is steep and growing steeper. Whetsell attributes rising investor interest in premier hotels properties in top locations to the hotel industry’s successful performance over the last couple of years and the fact that international capital is vying for high-quality assets across the commercial real estate sector. The result: the dollar signs continue on the upswing. “Right now values are getting pretty frothy out there,” he added.