By Jon Peterson
Greenwich, Conn.-based Starwood Capital Group has paid around $100 million to acquire the 173-room Sheraton Sunnyvale in Sunnyvale located at 1100 North Mathilda Avenue, according to sources that are familiar with the transaction.[contextly_sidebar id=”v1RHozxGmbNVc1gSJuhKqK2GEeuILQNJ”]“This property has a very strong location, as it’s situated next to a place where there is going to be a major Google operation. We are planning to make several improvements to the property in the future and to expand the asset,” says Barry Sternlicht, chairman and chief executive officer of Starwood Capital. The hotel is located very close to the Jay Paul two million square foot office campus known as Moffett Place that is 100 percent leased to Google.
The site of the hotel does have expansion capability up to at least 342 rooms. “We will be talking with the people in the city of Santa Clara and put together architectural drawings before we would start the expansion. My guess is that this probably won’t happen for 12 months. We would like to add a spa to the hotel, so that we could attract more weekend business. The plan would also be to add a higher level of food and beverage operation than [what] currently exits, which is something that the workers in the area will demand,” said Sternlicht.
There also might be a change with the hotel flag on the property. “I would think that there is a good chance that flag on the hotel would be changed in the future. I’m not sure of the timing on this right now,” said Sternlicht.
Starwood Capital acquired this property for its commingled fund, Starwood Global Opportunity Fund X. This is a commingled fund for which the manager raised $5.6 billion of equity. The capital raise was completed in March of this year. The investments for the fund are projected to be evenly split between assets located in the United States and Europe.
Fund X is an opportunistic commingled fund. One of the larger investors with a $300 million commitment was the Teacher Retirement System of Texas. The targeted returns for the fund are a 14 to 18 percent net IRR. Hotels will be part of the fund’s investment strategy along with distressed debt, corporate recapitalizations and land.
Starwood would like to find more hotels to buy in California. “We don’t own enough hotels in California and would like to find more in the future,” said Sternlicht.