In a sign that the hotel industry across the greater Bay Area is holding interest from buyers, global investment firm Blackstone Real Estate just acquired two Sunnyvale hotel properties for a combined price of $104.9 million. In the deal, Blackstone purchased a 145-room Courtyard by Marriott hotel in Sunnyvale for $75 million, or $517,241 per room, and the 94-room TownePlace Suites also in Sunnyvale for $29.9 million, or $318,085 per room. The seller was Hersha Hospitality Trust, a Harrisburg, Penn.-based real estate investment trust that owns hotel properties on the West and East Coasts of the United States.
The transactions were reported initially by the Silicon Valley Business Journal.
The deal between the two firms is part of a larger, national transaction that totaled $505 million, in which Blackstone agreed to purchase seven hotels across Hersha’s portfolio. The two hotels in Sunnyvale are located at 600 W. El Camino Real (Courtyard by Marriott) and 606 S. Bernardo Ave. (TownePlace Suites).
Sales of hotels across Santa Clara county were down 35 percent, and the dollar volume declined by a further 68.6 percent in the first half of the year, according to a California Hotel Sales Survey 2022 Mid-Year report by Atlas Hospitality Group, a Newport Beach, Calif.-based hotel brokerage and advisory firm. Prior to the Courtyard by Marriott sale in Sunnyvale, the most expensive sale was the 170-room Westin San Jose, which went for $62.3 million, or $366,470 per key.
Two parts of the region where hotel sales have done well are in San Francisco and Sonoma Counties. In San Francisco, individual sales were up 67 percent, while the dollar value volume went up 34.5 percent, stated the report. This was however dampened by the median price per room, which decreased by 23.2 percent. In San Francisco, the most expensive sale in the first half of the year was the 230-room Hyatt Place, which traded for $142 million, or $617,391 per room.
In Sonoma County, sales were also up, however only 10 percent, while the dollar volume decreased by 71 percent. However, the median price per room went up by 15.6 percent, according to Atlas.
Although sales of hotels across California cooled off somewhat during the first half of 2022 as compared to the record pace set during the same period last year, it still logged in as the second highest number of sales on record and the third highest in terms of dollar volume, according to the Atlas report.
Yet, the market in the second half of the year will likely not see such robust performance. Atlas predicts that in the latter part of the year, there will be a large decline in sales due to the rising cost of debt and uncertainty surrounding the direction of the economy.