Amid Ongoing Tourism Recovery, AEG Looks To Sell Stake In L.A. Live Hotels To Fund Expansion
In an apparent show of confidence for the outlook of Downtown’s hotel market, AEG plans to sell a majority stake of its L.A. Live hotel properties and use the proceeds to fund a long-planned expansion of the hospitality project.
“This offering represents the largest urban luxury hotel offering globally since the pandemic hit in March of 2020,” JLL Hotels & Hospitality Global CEO Gilda Perez-Alvarado said in a statement. AEG has tapped JLL’s Hotels & Hospitality team, led by Senior Managing Director John Strauss, to help find a buyer to serve as operating partner.
The hotels were completed in 2010 and cost $1B to build. They sit at the edge of the L.A. Live entertainment complex, which holds a collection of restaurants and bars plus a music venue and the newly renamed Crypto.com Arena.
AEG will use the money generated from the sale to help fund an expansion that has been in the works for several years, but was put on hold as a result of the coronavirus pandemic.
The new addition would add a 40-story tower with more than 800 rooms to a site north of the existing hotel complex. The project is now estimated to cost $800M, according to the LA Times.
AEG is working on getting city approvals for the project and hopes to start construction within the next 12 months, AEG Vice Chairman Ted Fikre told the LA Times.
The news comes as the hotel industry is still working to regain what it lost in the pandemic, especially in Downtown LA, where hotels were averaging about half their usual occupancy late last year. The industry appears to be on an upswing; hotel bookings were back at their pre-pandemic levels in October and November 2021, the LA Times reported at the time.
Meanwhile, hotel sales have boomed. Volume totaled more than $38B nationally last year — a 395% increase over 2020’s numbers, according to the LA Times, citing JLL data. In California, 293 hotels sold during the first six months of 2021, up from 114 during the same period in 2020, according to a midyear report from Atlas Hospitality Group.
Atlas President Alan Reay anticipates it won’t be long before AEG finds a partner.
“There’s a tremendous amount of capital that’s looking in the hotel sector and definitely looking at trophy hotel assets,” Reay told Bisnow.