Slatkin Brothers Dangle $700M Recap of 2 Santa Monica Hotels

Edward and Thomas Slatkin want to recapitalize two beachfront Santa Monica hotels at $700 million to raise cash to build more than 350 branded residences next door.

The owners of the 198-room Shutters on the Beach at 1 Pico Boulevard and the 129-room Casa del Mar at 1910 Ocean Way are exploring the capital raise valued at $2.1 million a room, Bloomberg and Commercial Observer reported, citing unidentified sources..

In a refinancing last year, the hotels were appraised at a combined value of $605 million. The unspecified amount of land next door could be worth $100 million more.

The Slatkin brothers are working with adviser Eastdil Secured on a recapitalization that could value the hotels at about $700 million, people familiar with the effort told Bloomberg.

“This initiative is not a sale of the properties, but a step to unlock value and secure resources for long-term growth and continued success,” Thomas Slatkin told Bloomberg in an email. “The project includes an opportunity to develop more than 350 branded residences adjoining the hotels, marking a significant addition to the properties.”

Last summer, the Slatkins secured a $400 million loan package from Citigroup and Goldman Sachs for the waterfront Santa Monica properties, refinancing $430 million in existing debt tied to the luxury hotels, The Real Deal reported.

The Slatkins built Shutters in 1993 and redeveloped the historic Casa del Mar in 1999, renovating both in 2017. The two inherited a hotel development business from their family — their father Burt owned and ran the Beverly Hills Hotel from 1953 through 1986.

In recent years, only a few California hotels have traded for more than $2 million per room, including Host Hotels & Resort’s purchase in 2021 of Alila Ventana Big Sur, according to Bloomberg.

“There’s a clear precedent for rare coastal California real estate to transact at attractive valuations,” James Cole, a partner at Ohana Real Estate Investors, told the news service. His firm has traded two hotels, the Montage Healdsburg and the Montage Beverly Hills, for at least $2 million per room.

Hotel deals have been slow, with would-be buyers recoiling at higher-for-longer interest rates.

But there’s been more optimism among investors that the market is looking up, according to Bloomberg. The owners of two Hawaii resorts, the Hyatt Regency Waikiki and the Grand Wailea Resort in Maui, have explored potential sales.

— Dana Bartholomew