Sixth Street Buys San Francisco’s Clancy Hotel From Braemar

San Francisco’s Clancy hotel has a new owner.

Locally based investment firm Sixth Street acquired The Clancy at 299 Second Street for $115 million, Sixth Street said in a statement.

Braemar Hotels & Resorts offloaded the 410-room property in one of the Bay Area’s largest deals of the year. Sixth Street completed the acquisition in partnership with Riller Capital.

The deal works out to $280,487 per key, making it the most-expensive hotel transaction of the year so far, outdoing Park Hotels & Resorts’ sale of the 315-room Hyatt Centric Fisherman’s Wharf in May for $80 million, or $253,000 per key.

The hotel sits in the middle of South of Market and features 8,700 square feet of flexible meeting space, two food and beverage spots and parking spaces for 140 vehicles. The rooms underwent renovations in 2020.

Sixth Street bought the hotel in anticipation of a comeback in the San Francisco lodging market, especially with the increasing presence of artificial intelligence and tech firms moving in. The growth of AI firms has helped create “strong tenant demand” for lodging in downtown, said Marcos Alvarado, partner and head of U.S. real estate at Sixth Street.

Another deal is expected to take the top spot soon.

Newbond and Conversant are nearing completion of their court-approved purchase of the nearly 3,000-room Hilton San Francisco Union Square and Parc 55 hotel complex for about $415 million, or $140,917 per key. At the same time, Blackstone is in contract for the 277-room Four Seasons Hotel San Francisco for about $130 million, or $469,314 per key, which would be the priciest per-key hotel deal this year.

Sixth Street has increased its holdings in its hometown beyond just hotels. Earlier this year, the firm bought a 10 percent ownership stake of the San Francisco Giants; that comes a year after it made a record-breaking investment in the Bay FC women’s soccer team last year, the San Francisco Business Times reported.

The hotel market in San Francisco and across the Bay Area has been plagued by loan defaults, foreclosures and shutdowns over the past two years. Sixth Street’s purchase is the latest instance of a hospitality company committing to the region as a perceived comeback is underway.

— Chris Malone Méndez