Historic downtown San Diego hotel sold for $65.3 million

Downtown San Diego’s Courtyard hotel, well known for its historic roots as a prominent bank building dating to the late 1920s, has sold for a reported price of nearly $65.3 million, marking the second sale of the property in a little over a year.

The brokerage CBRE, which arranged the transaction, announced the deal on Thursday, but would not disclose the purchase price. However, records filed with the San Diego County Assessor/Recorder’s office show that it sold for $65,290,000, confirmed Ray Kim of the office’s assessment services division.

This story is for subscribers

We offer subscribers exclusive access to our best journalism.
Thank you for your support.

It was only early last year that the then owner of the hotel, Hersha Hospitality Trust, sold the 245-room property to Pimco, a global investment management firm headquartered in Newport Beach, for $64.5 million.

The hotel’s new owner is an affiliate of New York City-based Certares Management LLC, which acquired the Courtyard by Marriott property in partnership with Philadelphia-based HHM, a hotel management and investment company that operates more than 185 hotels across 30 states. It has operated the San Diego hotel for more than a decade.

“We look forward to the Courtyard’s accelerated growth after the completion of a significant renovation as the San Diego market continues to enhance its presence as an international leisure, convention, and life sciences hub,” said Certares vice president Mike Kusy in a news release.

Southern California hotel analyst Alan Reay said he was surprised that the sales price had barely increased from what the hotel sold for a year ago.

“That tells me that the market is stagnating in terms of values ​​and that the rising interest rates are having an impact because this is a beautiful property,” said Reay, president of Orange County-based Atlas Hospitality Group.

Reay said he is increasingly hearing reports of commercial real estate deals canceled because of concerns about quickly accelerating interest rates. Just this week the Federal Reserve announced another three-quarter point increase in interest rates.

“I think this is going to have a huge impact on the number of transactions moving forward,” Reay said. “The vast majority of sales during the first half of this year were in the first four or five months, and even the ones that closed in June were put into contract a couple of months earlier. Knowing that interest rates are going up, maybe the seller thought that would put a continued downward pressure on prices.”

CBRE brokers declined to discuss the sale.

The Courtyard hotel has changed hands a number of times over the last decade. When Hersha purchased it in 2013, the price was $71 million, considerably more than this month’s sale. The seller at the time, Wheelock Street Capital, bought the hotel in 2011 for $61.1 million.

Located at 530 Broadway, the 14-story Courtyard by Marriott hotel features an imposing lobby with 32-foot-high ceilings and 4,800 square feet of meeting space, including what’s known as the Safe Deposit room that still has the original 47,000-pound Mosler Safe Company vault door. The 245 guest rooms recently underwent a $4.5 million renovation.

Built in 1927 as the San Diego Trust & Savings Bank, the property was converted to a hotel in 1999. As part of the conversion, the bank’s original 35 columns, faced with marble from the US, Europe and Asia, remained in place, as did the circular chandeliers, coffered plaster ceiling and bronze teller wickets.

CBRE, who handled negotiations for the seller in the most recent transaction, noted in a news release that the new acquisition comes at a time when the San Diego area is seeing more sales activity than any other region in Southern California.

That actually is not correct, says Reay.

A soon-to-be-released hotel sales report prepared by his firm documents that 17 hotels were sold in San Diego County during the first half of this year, Reay said. That compares to 17 in Riverside County, 16 in San Bernardino County, and 29 in Los Angeles. I expect a significant slowdown in the second half of the year.

Leave a Comment

Your email address will not be published.