Surprise! Jeff Klein’s Sunset Tower Hotel sells to … Jeff Klein
Less than a month after The Real Deal broke the news that the 81-key Sunset Tower Hotel had been quietly listed by JLL’s Jeff Davis, with bids expected to exceed $90 million, a deal is in the works – but it’s a curveball.
Jeff Klein, the hotelier who elevated Sunset Tower to a celebrity haunt, unexpectedly exercised a right of first offer to buy out his former partner’s 80 percent stake in the property for roughly $95 million, or almost $1.2 million a key, sources told TRD.
Klein and an unidentified partner purchased the 80 percent stake from ER Hollywood, an entity controlled by Thai billionaire Thosapong “Mr.T” Jaruthavee, sources said.
The deal is in escrow and expected to close in 90 days. At that price, it would set a price-per-key record for hotel sales in West Hollywood, eclipsing Northwood Investors’ $975,000-per-room purchase of the London.
The New York Post first reported news of the sale earlier Thursday, but did not provide a sales price.
Klein has long held a 20 percent interest in the property. He gave new life to the historic hotel as a glitterati hotspot, playing host to the likes of Vanity Fair’s Oscars party.
Now that he and the partner fully own it, Klein is planning to renovate the hotel’s terrace and guest rooms, sources said. Its Tower Bar, frequented by the likes of Gwyneth Paltrow, Jennifer Aniston and Lady Gaga, will remain as-is.
Potential buyers circling the property were shocked by the twist in the deal, sources said.
“They figured he was just some hotel guy, and wouldn’t have the cash to exercise his right,” one source said. “They didn’t think he could get that kind of money together so quickly.”
One potential buyer, a Saudi investor, is rumored to have toyed with a price $25 million higher than Klein’s offer, with a request to live in the top three floors of the hotel, according to sources, who said potential buyers were taken aback when the property they were marketed was pulled.
JLL’s Davis, however, said he did not solicit any official bids during the ROFO period, so any rumor of a price is mere speculation.
“I think this deal was a win-win for both sides,” Davis said. “It’s an amazing asset, Jeff is a great person and an amazing operator.”
Klein and ER Hollywood could not be reached for comment.
Klein and then-partner Peter Krulewitch bought the hotel for just $18.5 million in 2004. In 2015, Krulewitch sold his stake to Mr. T’s entity for $75 million. Klein remained managing partner.
If it closes, the deal would join an elite handful of hotels in Los Angeles County that have surpassed the $1 million-per-key benchmark. Anbang Insurance bought the Loews Santa Monica Beach Hotel for $1.4 million per key last year. In 2015, the Mani Brothers bought the 80-key Malibu Beach Inn from David Geffen for a whopping $1.7 million per key.