By Jon Peterson
A private San Francisco investor has paid $25.3 million to acquire a mixture of hotel and apartment assets in the city. The properties are comprised of a 59-room Great Highway Inn hotel at 1234 Great Highway and a 28-unit apartment complex located at 1301-1361 La Playa Street in San Francisco. These assets cover two city blocks totaling 43,529 square feet of land.
The seller of these assets was a private individual who is 85 years old and has been involved in the ownership of the assets since 1956. Both the buyer and seller were represented in the transaction by Hotel Assets Group. “The seller had made the request that all of the assets be sold to a single buyer and that is why the transaction was done in that way,” says Eric Gunderson, a partner with Hotel Assets Group. He works out of the company’s regional office in San Francisco.
The buyer of the assets does have experience operating hotel assets and has a management company to oversee all of the properties. The hotel property has been underperforming. It had been pretty well occupied during the summer season, however it had faced challenged during the rest of the year to attract customers. Part of that could be the size of the rooms; approximately 47 percent of the hotel rooms have two bedrooms.
“I think that one of the benefits of the hotel is that its close proximity to the UCSF Parnassus Campus. This is the only hotel located in this part of San Francisco,” said Gunderson. The hotel is located around 3.1 miles from the campus. The hotel also has a vacant free-standing restaurant space that totals 2,800 square feet. This is where the new owner could add some value to the property in the future.
The apartment property in the sale is now 100 percent occupied. The asset does a number of unites in rent control, and the property does need some minor cosmetic renovation.