By Jon Peterson
Los Angeles-based Urban Commons LLC has closed on its first San Francisco Bay Area hotel acquisition with the $15.2 million purchase of the 196-room Radisson Plaza San Jose hotel near the Norman Y. Mineta San Jose International Airport.[contextly_sidebar id=”eba69a093bf01707f1867ffe07214d22″]The price for the airport hotel equates to $77,511 a room, a price consistent with the market rate, said Tom Callahan, chief executive officer west for PKF Consulting USA in its San Francisco office. “It’s been established that most hotels located outside of downtown San Francisco are selling at less than $100,000 a key, and this falls in that range,” he said.
The seller was C III Capital Partners based in Dallas. The investment management firm declined comment for this story. It acquired a note on this property from an un-named lender and foreclosed about six months ago.
The property is to be re-named Four Points by Sheraton San Jose and will be the first Starwood-branded hotel at the San Jose airport. The raising of the new flag will take place in about four months. The asset is being operated as an independent hotel at present. The new owners plan a $5 million renovation, said Taylor Woods, a principal with Urban Commons.
“The work will include improving the rooms, the outside of the property and the public areas,” said Woods. Part of this will bring the property up to speed from an Internet bandwidth and wireless perspective.
It is the second major hotel transaction in the airport’s sphere of influence in the last several weeks. San Jose-based Barry Swenson Builder, acting as a general contractor, broke ground May 15 on an $80 million, two-hotel complex at 10 Skyport Drive, also immediately east of the airport. The property is being built for Irvine, Texas, – based Huntington Hotel Group and is the first new airport hotel in nearly two decades, according to one investment group.
Included in the hotel acquisition is a parking garage with room for around 300 cars, Wood said. This property can be used by hotel guests or by travelers looking for a park-and-ride option to the airport. “At this point of ownership, we are not planning to make any changes to this property from a re-development perspective,” said Woods.
Urban Commons acquired the San Jose property along with Diamond Bar, Calif., -based Brighton Management. This deal was completed with a combination of equity and debt. Urban is the vast majority owner of the property. It did not give further investment details beyond confirming the purchase price. Brighton has a small ownership stake in the property and will manage the asset going forward. The company did not respond to phone calls seeking comment.
Urban is known as a buyer of three- and four-star full-service hotels. Its previous activity has been in Southern California and Sacramento. The company’s hotel partners include Starwood, Hilton and InterContinental. Urban and Brighton have now come together on 12 hotel takeovers since last year totaling in excess of $210 million in asset value.
“For the last six months we have been looking at the Bay Area for a property to purchase. We like the region very much as it has had a strong economic recovery, and the area should continue to improve as time goes on,” said Woods.
Woods said it would not be Urban’s last Bay Area buy: “We have two other properties that we are in escrow on. We are hopeful that we can close on them sometime in June.”
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