Sunstone Hotel Investors has entered into a definitive agreement to sell the Hyatt Regency San Francisco for $279 million, or around $340,000 per key.
According to the real estate investment trust's news release, the buyer is "funds affiliated with Blackstone Real Estate," and the transaction is expected to close in late July or early August. Sunstone CEO Bryan Giglia said the company has already directed nearly $70 million of the proceeds to repurchase common and preferred stock.
"The sale is consistent with our strategy of more actively managing the portfolio to capitalize on higher private market values and recycle the proceeds into more accretive options on a risk-adjusted basis," Giglia said in the release. "While we have already generated value by deploying a portion of the proceeds, the remaining liquidity increases our flexibility and facilitates our ability to reinvest in a manner that will provide our investors with superior returns and greater per-share [net asset value] growth."
Sunstone originally purchased the property from Churchill Capital Corp. in December 2013 for $262.5 million and renovated it in 2018. The hotel has 821 rooms and is managed by Hyatt Hotels Corp. Eastdil Secured served as broker for the sale and J.P. Morgan Securities served as financial adviser.
The San Francisco hospitality market has struggled in the years following the pandemic, but some hotel owners — including Pebblebrook Hotel Trust execs on a recent earnings call — are pointing to a notable market recovery. In January, revenue per available room grew 12.2% citywide, reported CoStar News' Bryan Wroten. San Francisco was then buoyed by hosting the Super Bowl in February.
On the company's first-quarter earnings call in May, Sunstone reported that its resorts led the portfolio with significant revenue-per-available-room growth. The ongoing renovation projects are all at resort properties, the company reported.