SUNSTONE ACQUIRES $475M INTEREST IN HILTON SAN DIEGO BAYFRONT

by admin

SAN DIEGO — Sunstone Hotel Investors has acquired a controlling interest in the Hilton San Diego Bayfront hotel for $475 million. The Aliso Viejo, Calif.-based REIT will own 75 percent of the hotel, with Hilton Worldwide controlling the other 25 percent.

The Hilton San Diego Bayfront opened in 2008 along a prime spot along the city's waterfront. It is adjacent to the San Diego Convention Center and across the street from Petco Park, the home of the San Diego Padres. The 30-story hotel contains 1,190 rooms, 165,000 square feet of indoor meeting space, 4.3 acres of outdoor meeting space along the waterfront and an 894-space parking garage.

To fund the acquisition, Sunstone has taken out a $240 million mortgage. The loan carries a 5-year term and a floating interest rate price 325 basis points above LIBOR.

Hotel brokerage firm Hodges Ward Elliott represented Hilton in the transaction.

This latest deal comes just a week after Sunstone announced the completion of its sale of the Royal Palm Miami Beach to KSL Capital Partners for $130 million. Constructed in 1939 in the city's affluent South Beach submarket, the hotel contains two swimming pools, a beachfront restaurant, a poolside bar, a lobby lounge, a full-service spa and more than 10,000 square feet of meeting space.

The 409-room hotel is set to be reflagged as The James Royal Palm upon the completion of a $42.6 million renovation, which was started by Sunstone and will be complete by late 2012. Sunstone is providing a $90 million loan to KTR to help fund the deal.

Year to date, Sunstone has completed more than $850 million in hotels located in markets such as New York City, New Orleans and San Diego. Its portfolio comprises 33 hotels totaling 12,676 rooms. In addition, the company commenced $30 million in renovations during the first quarter at four of its hotels: the Embassy Suites Chicago, the Marriott Tysons Corner in Virginia, the Marriott Quincy in Massachusetts and the Kahler Grand in Minnesota. It is also completing renovations to the Marriott Boston Long Wharf and is repositioning the Doubletree Guest Suites Times Square in New York City as the Hilton Suites Times Square.

— Coleman Wood

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