Iconic Sunset Tower Hotel in WeHo could fetch $90M: sources

Hotelier Jeff Klein seeks record price for celeb hangout

TRD LOS ANGELES /
Feb.February 23, 2017 07:43 PM

Updated: Friday, February 24, 2017, 2:23 p.m.: It’s the hotel where Katy Perry first went public with new boo Orlando Bloom; where Jerry Hall flashed the engagement ring Rupert Murdoch gave her at a Golden Globes party; and where Rachel Zoe recently presented her latest collection to a party of guests that included Emma Stone, Selena Gomez and The Weeknd. Now, its owners are looking to take that seen-and-be-seen cache to the bank.

Hotelier Jeff Klein and his partner, an entity owned by Thai billionaire Thosapong Jaruthavee  — also known as “Mr. T” — are looking to sell the 81-key Sunset Tower Hotel in West Hollywood for a price in the $90 million range, sources told The Real Deal. If they succeed, the $1.1 million a room pricetag would make the WeHo record books.

The 117,656-square-foot Art Deco hotel at 8358 Sunset Boulevard  — where a penthouse room costs $2,250 a night — is on offer with or without the current brand and management in place, said sources with knowledge of the listing. It is possible for a buyer to buy out just Mr. T’s stake, or purchase the property in full, buying out Klein’s 20 percent equity. 

Jeff Davis and Tony Muscio of JLL are quietly shopping the property, sources said, but the brokers could not be reached for comment. Representatives of Klein’s JK Hotel Group also did not respond to requests.

Mr. T’s outfit bought an 80 percent stake in the hotel property for $75 million in 2015, from an investment group led by Peter Krulewitch. Klein retained his 20 percent interest in the property. JLL’s Davis and Muscio, along with their colleague John Strauss, handled that sale.

Klein and Krulewitch bought the property in 2004 for a mere $18.5 million, according to the New York Post. Klein, in humble fashion, told reporters he borrowed heavily to acquire it. Under his stewardship, the hotel, which was a hangout for Frank Sinatra, entered a new era, with its Tower Bar becoming a go-to spot for a new generation of celebrities.

The hotel played host to Vanity Fair’s Oscar party for 15 years, until 2015.

If JLL’s brokers can indeed fetch $1.1 million a room, it would set a per-square-foot price record for hotel sales in West Hollywood, said Bruce Baltin of PKF Consulting, a division of CBRE. The priciest recent sale in the city was Northwood Investors’ 2013 acquisition of the London West Hollywood hotel for $195 million, or about $975,000 per room, Baltin said, adding that he expected Klein to get his ask.

“Architecturally, the Sunset Tower Hotel is well regarded and iconic,” he said. “West Hollywood is a healthy market, with a good mix of leisure and entertainment.”

Many hotels will soon finish their trek through WeHo’s pipeline — the James, the Edition, the Pendry and the Kimpton La Peer among them. But the city, which has a hotel occupancy rate in the low 80 percent range, is likely to absorb them, Baltin said.

Elsewhere in Southern California, the $1 million-per-key watermark has been surpassed. The Montage Laguna Beach, in Orange County, traded for $360 million, or $1.4 million a room, in 2015.

Although it was not an outright sale, Mr. T’s stake in the Sunset Tower was also a record, according to Vincent Chang of Cushman & Wakefield. Factoring for only 80 percent of the rooms, in accordance with its 80 percent stake, it paid almost $1.3 million a unit.

Klein launched his own firm in 2000 when he opened New York’s City Club. In L.A., his JK Hotel Group acquired the San Vicente Inn in Los Angeles. Its long-planned renovation is set to be completed in early 2018.

Correction: This story has been updated to clarify that Klein’s partner is an entity owned by Thai billionaire Thosapong Jaruthavee.

 

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