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Loews to Pay Record Price for The Mandarin

Everyone has been wondering about the sales price for the Mandarin Oriental, which Loews Hotels and Resorts announced it was buying last month. It's been kept pretty tight under wraps, but we might have an idea.

HVS senior managing director Suzanne Mellen, who appraises hotels and casinos, tells us the Mandarin is going to trade at a "huge number" that could blow past other big hotel deals, like the Ritz-Carlton's 2013 sale for $161M, or $476,000 per key. "It's going to be higher than anything historically," she says. Suzanne says Loews is willing to pay top dollar because it wants assets, and when you are building a brand, which is what Loews is doing, you need certain anchors in certain cities. Loews CEO Paul Whetsell would not disclose the purchase price for the iconic 158-room Financial District staple at 222 Sansome; the deal is expected to close this week.

Chicago-based GEM Realty Capital bought the hotel in 2012 for $63M, or $398,000 per key, and then completed a big $20M revamp soon after. Suzanne says there's been a huge volume of hotel sales in S.F., counting five major trades in the past six months, starting with JW Marriott in Union Square. Last spring LaSalle bought Hotel Vitale for $130M, one of the largest hotel purchases in the city in recent years based on price per square foot. She says values are strong and owners feel like it's a good time to exit, spotting more activity here than in LA.