Hotel sales from the Bay Area to Southern California are in the lurch, with investors fleeing toward the exits.
The number of hotels sold in the Bay Area and across the state plunged during the first six months of the year, exceeding the doldrums of the Great Recession, the San Jose Mercury News reported, citing Atlas Hospitality Group.
The number of hotels, motels, inns and lodges sold across the Golden State from January through June fell by 52.9 percent compared with the first six months of last year.
At the end of the recession in 2009, hotel sales tumbled 51 percent.
“We have seen nothing like this, nothing this bad,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, which has tracked the hotel industry in California for two decades.
Both Northern and Southern California suffered huge declines in the number of hotels sold, with SoCal having the steepest fall.
Southern California saw a 58.9 percent decline in the number of hotels sold. Some 62 hotels were sold in the first half of the year, compared to 151 in the first half of last year.
Northern California saw a 44.6 percent decline in the number of hotel sales. Some 62 hotels were sold in the first half, compared to 112 in the same period last year.
Both regions still had major deals, though foreclosures were added to the mix.
The biggest hotel deal in NorCal was the purchase by Redwood City-based Ohana Real Estate of the 276-room Claremont Hotel & Spa on the edge of Berkeley for $163 million, or $591,700 per room.
In San Francisco, Texas-based Highgate and locally based Flynn Properties bought the 135-room Hotel Huntington on Nob Hill for $29.3 million after taking over the loan and assuming ownership through a foreclosure deed.
The biggest hotel deal in SoCal was the purchase by the U.K.-based Reuben brothers of the Fairmont Century Plaza, a 394-room hotel, condo and retail complex in Los Angeles for $1 billion, through another foreclosure sale.
More hotel foreclosures may loom over the horizon, according to Atlas Hospitality, as mortgage rates push up loan finance costs for potential buyers.
“We are now seeing an uptick in notice of default filings and foreclosures, as well as borrowers simply handing the keys back to the lenders,” Atlas Hospitality stated in its mid-year report.
— Dana Bartholomew
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