Simon Baron Development, a significant player in the New York City real estate market, is making moves in Los Angeles.
The company has acquired the 99-year-ground lease on the Stay on Main Hotel at 640 South Main Street in Downtown L.A. for around $15 per square foot per year, The Real Deal has learned. The 600-room hotel, which is only a few blocks from Skid Row, was previously owned and operated by 248 Haynes Hotel Associates, LLC, a New Jersey-based company.
The hotel, formerly known as the Hotel Cecil, is best known as the real life inspiration of “American Horror Story,” after a dead body was found inside its rooftop water tank in 2013. Serial killers Richard Ramirez and Jack Unterweger also reportedly lived there in the 1980s and 1990s, respectively.
The deal is Simon Baron’s first foray into the L.A. market. The company, led by Jonathan Simon and Matthew Baron, has previously focused on developing multi-family properties in the New York region and currently controls properties worth a cumulative $1.7 billion. It plans to reposition the 170,000-square-foot budget hotel by completing a significant capital improvement program.
“We plan to use this project as a catalyst to begin more projects on the west coast, more specifically, in the greater Los Angeles area,” Baron said in a statement. “Downtown L.A. is transforming into a major developed area and undergoing a renaissance… We are looking forward to contributing to that.”
David Swartz of CGS3 represented the company in the deal.
Simon Baron is just one in a string of developers looking to invest in hotel deals in the L.A. market, including other New York players such as Steve Witkoff of the Witkoff Group, who is developing an Edition branded hotel in West Hollywood.
That’s despite speculation of a potential slowdown in hotel occupancy levels. Nationally, the industry predicts 4 percent growth in revenue per available room (RevPAR) this year, which is less than the 5 to 8 percent growth rates seen over the last several years, The Real Deal previously reported.
The hotel sits in an area that monied developers used to shy away from, but luxury development has inched closer to Skid Row’s borders in recent years, The Real Deal recently reported.
In New York, Simon Baron recently purchased a site at 12 Franklin Street in Greenpoint, Brooklyn for $24 million. Its plans for the site are not yet clear.