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Mark Hopkins' New Owner, Look

San Francisco Hotel

The Mark Hopkins just traded to a JV between affiliates of Woodridge Capital Partners and funds managed by Oaktree Capital Management, and we've got their new game plan for the iconic S.F. hotel. (We were gonna get them through espionage, but then they just told us.)

The 383-room hotel sold for $120M, or about $313k per key, and the new owners promised to pump $20M into upgrades. That's not enough for a full gut job, says one industry source, but that should be enough to reposition the old school 1920s property back to a higher-end hotel. (It will make the ghosts happy as well.) Seller IHG will continue to manage the hotel under a long-term management contract, which means it'll have a hand in the redesign process. The hotel generated revenues of $42M last year. Boston Properties' Helen Duong (above) celebrated her last meeting as CREW prez at the group's holiday lunch at the hotel in December.

We hear the first line of changes to refurbish and reposition the hotel could include upgrades to public spaces and guest rooms. The Top of the Mark—a popular stomping ground for tourists and locals alike with some 100 martinis to try (we volunteer to test them all)—could also get a makeover, we hear. The sale is on par with its ongoing strategy to be "asset light," IHG spokeswoman Suzette Meade tells us this morning from Atlanta. Last year the company sold the InterContinental London Park Lane and is selling most of its interest in the InterContinental New York 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. The hotel 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.

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.