New LA Owners for Mark Hopkins
S.F.'s iconic Mark Hopkins hotel traded this week to a JV of Los Angeles-based Woodridge Capital Partners (above, founder Michael Rosenfeld speaking at a Bisnow event last year) and funds managed by Oaktree Capital Management. The 383-room hotel sold for $120M, or $313k per key, and the new owners will pump $20M into upgrades. That's not enough for a full gut job, says one industry source, but should be enough to reposition the 1920s property as a higher-end hotel. Seller IHG will continue to manage the hotel and have a hand in the redesign process. The hotel generated $42M in revenue last year.
The Top of the Mark—that popular stomping ground for tourists and locals with some 100 martinis to try—could get a makeover, we hear. The sale is on par with IHG's ongoing strategy to be "asset light," spokeswoman Suzette Meade told us this week from Atlanta. Last year, the company sold the InterContinental London Park Lane and is selling most of its interest in NYC's InterContinental Barclay, expected to close in March.
The three hotel sales will reap gross proceeds of almost $830M. Suzette wouldn't discuss any other locations that could possibly go up for sale; there are nine other IHG-owned hotels worldwide. The Mark Hopkins first opened in 1926 and became an InterContinental in 1973. It was shopped previously by some big names but there were ground lease issues that needed to be resolved first; IHG acquired the lessee interest in 1983 and subsequently acquired the freehold in 2010.
Here's past S.F. CREW president Helen Duong celebrating a successful year at the group's holiday lunch at the Hopkins in December. IHG might've seen a better sales price 10 to 20 years ago when Nob Hill was more popular (a lot of weird things were more popular 20 years ago... we're looking at you, Crystal Pepsi); now areas like SoMa and North Beach are arguably more appealing for hotel investors. LaSalle is paying more than double per key ($650k) for the waterfront Hotel Vitale, for example. Sources say non-traded REITs are becoming more active in the market because leverage is starting to come back, and with interest rates rising, hotels are more attractive against inflation.