A subsidiary of Blackstone Real Estate has purchased two business hotels in Sunnyvale for $99 million.
The New York-based investment giant has acquired a 145-room Courtyard Marriott and a 94-room TownePlace Suites as part of a seven-hotel deal with Hersha Hospitality Trust, the San Francisco Business Times reported.
The Blackstone subsidiary paid $69.1 million for the Courtyard Marriott at 600 West El Camino Real, or about $477,000 per room. In 2016, Hersha bought the hotel for $75 million, or $517,000 per room.
Blackstone bought the TownePlace Suites at 606 South Bernardo Avenue for $29.9 million, or $318,000 per room. Hersha bought the hotel for $27.7 million, or $295,000 per room, in 2015.
The acquisitions stemmed from an April agreement that Hersha would sell seven of its city hotels to Blackstone for $505 million. For the Pennsylvania-based real estate investment trust, that meant a shift in strategy.
“We are really focusing our energies more on luxury resort and lifestyle assets,” Ashish Parikh, Hersha’s chief financial officer, told the Business Times. “It wasn’t about the market – we really like the Bay Area – it was about the type of asset.”
Hersha’s newest hotel in Northern California is the 60-room Sanctuary Beach Resort in Marina, north of Monterey.
The Courtyard Marriott opened in 2014 and caters primarily to business travelers drawn by its more than half a dozen meeting rooms, outdoor pool and gym, and proximity to corporate headquarters from Google and Apple. A Blackstone entity has applied for a new liquor license.
The deal with Courtyard is complicated by negotiations around the debt obligations Blackstone would assume for a commercial mortgage-backed collateral loan backed by the hotel.
Parikh estimated it would take Courtyard Sunnyvale “another year or two” to return to pre-pandemic activity.
Some markets, such as San Francisco and Chicago, make it sobering. He said large corporate hotels were at risk of becoming “obsolete” when faced with unfavorable labor agreements and the challenge of filling up to 1,000 hotel rooms and meeting spaces such as halls. ball.
“I think maybe it’s the ones that never come back,” Parikh said. “If I had to avoid one segment of the industry, it would be big box city hotels.”
In July, a Blackstone-controlled subsidiary sold four Motel 6 properties in San Jose, Santa Clara, Gilroy and Campbell to separate buyers for $40.3 million.
— Dana Barthelemy