Hotels aren’t worth what they used to be, but they’re still worth a lot.
A Residence Inn hotel in an East Bay suburb sold for $28.5 million, or $226,000 per room, according to public records.
Despite the somewhat sizable transaction, the buyer and seller have been mostly flying under the radar in California real estate.
The seller was real estate investor Rao Yalamanchili, who’s been busy this year in the residential sector, adding $68 million to his portfolio with the acquisition of three properties.
The buyer is listed as Los Angeles-based Five Rivers Hospitality LLC. A thorough search yields very limited information on the entity. It was registered as an LLC by Jagpreet Sandhu in February of this year, according to California state records.
Residence Inn by Marriott Pleasant Hill Concord is located at 700 Ellinwood Way in Pleasant Hill and has 126-units. The 50,700 square-foot hotel was built in 1991. Yalamanchili purchased it three years ago for $25.3 million.
The Residence Inn–which operates under the Marriott brand umbrella–sold for less than a recent traditional hotel transaction in the bay area when Pebblebrook Hotel Trust sold the 236-room Hotel Spero in Union Square for $71 million, or $380,000 per room.
Blackstone also acquired two properties in Sunnyvale that both sold at much higher prices. The 145-room Courtyard Marriott closed at about 69.2 million or about $477,000 per room, and the 94-room TownePlace Suites closed at about 48.6 million or $517,000 per room.
While Residence Inn went for below recent deals in the Bay Area, this transaction aligns with how the area’s hospitality market has been performing so far this year. The average price per room on hotel purchases was $239,900 in the first six months of this year, which was down 8.2 percent from the average price per room of $261,200 that were bought in the first half of 2021, according to a report by Atlas Hospitality Group.
This isn’t the only declining trend. The total dollar amount for hotels bought in the nine-county Bay Area was $661 million, which was down 67 percent from the $2 billion in hotel purchases during the first six months of 2021.
The average price for hotel purchases in the Bay Area during the first half of 2022 was $16.9 million, which was down 40 percent compared with the first six months of 2021, when the average purchase price was $28 million.
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