Record $1MM Per Room Sale Price for Mandarin Oriental Hotel in San Francisco

Mandarin, San Francisco, LaSalle Hotel Properties, Loews, GEM Realty, Cornerstone Real Estate Advisers, Bay Area, hotels, hotel rooms, Mandarin Oriental

Mandarin san-francisco-exterior-entrance-1

By Jon Peterson

The pending acquisition of the 158-room Mandarin Oriental in San Francisco will create a new record price paid on a per room basis. The sale price is going to be in the neighborhood of $1 million per room, according to multiple sources that are aware of the transaction, making the acquisition close to $158 million. The previous record was $650,000 per room that was paid by Chicago-based LaSalle Hotel Properties in February of last year for its $130 million purchase of the 200-room Hotel Vitale.

The buyer of the Mandarin Oriental is New York-based Loews Hotels & Resorts. The company declined to comment on the acquisition price of the property when contacted for this story. The buyer did say that the purchase of the property is expected to close sometime in mid-April.

Loews had commented in February that the purchase of this property will be its first move into the San Francisco market. This fact and investors’ general interest in the San Francisco market are the main factors driving the pricing on this property, according to hotel sources tracking the market in the Bay Area.

The seller of the Mandarin Oriental will be making a great deal of profit on the sale. Chicago-based GEM Realty had acquired the property in August of 2011 for $63 million or $398,000 per room. This followed the sale of the property in 2001 from Hartford-based Cornerstone Real Estate Advisers for $41 million.

The San Francisco hotel market continues to be a very strong performer. According to industry sources, RevPAR for hotels in San Francisco for this year is up 12.1 percent through the end of February. For the whole year of 2014, RevPAR for hotels in this market was up 12.6 percent.

A good reason for this is the overall strong performance of the economy in San Francisco and the limited amount of new hotels being built in San Francisco.

Loews is a major owner of hotels and resorts on a nationwide basis. The company owns and/or operates 23 properties across the United States and Canada.

Photo courtesy of Mandarin Oriental San Francisco

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