The historic Lafayette hotel, a North Park landmark that dates to the 1940s, has been sold to a local restaurant group for $25.8 million.

The sale, which closed escrow Wednesday, will now clear the way for what could be a two-year restoration project that the new owner says will be the property’s “most significant overhaul” since its inception in 1946.

Purchasing the 131-room hotel is San Diego-based CH Projects, which is making its first foray into the world of hotels. The restaurant group is well known for its continually expanding portfolio of San Diego drinking and dining venues, including Born & Raised and Ironside Fish & Oyster in Little Italy and Raised by Wolves in Westfield UTC. Its most visible hotel-related project, which has yet to open, is the rooftop venue it created on the 19th floor of the Intercontinental in downtown San Diego.

“We closed yesterday, and I’m still pretty shocked,” said CH co-founder Arsalun Tafazoli, who declined to say how much his group plans to invest in the renovation. “There were so many ways it could have been derailed, so I haven’t fully processed it yet. But it’s really happened so now we are formulating what we want to do. This is not something that will be happening fast. It will be a two-year process.”

Tafazoli said he wants to honor the hotel’s historic roots while providing contemporary amenities and features that will make it appealing for the local community. CH will presumably expand the dining and drinking options — there is only one restaurant now — and there will be a “wellness” component, Tafazoli said.

He expects that the design and permitting process will take a year alone to complete.

The seller of the hotel is developer Jay Wentz of JCG Development, who purchased the property in 2004 for $11 million. Victor Krebs of Colliers represented him in the sale to CH Projects.

Several years after Wentz purchased the Lafayette, it underwent an ambitious $6 million renovation. During the project, crews uncovered and restored the conservatory room’s terrazzo floor, period bathroom tile work, and the concrete floor in the hotel’s cafe. And the rooms were modernized with flat-screen televisions and added a fully equipped workout room.

The hotel, which decades ago was known as a retreat for the Hollywood elite, also has an Olympic-sized pool that was originally designed by “Tarzan” star Johnny Weissmuller and used by Florence Chadwick before she swam the English Channel in 1951.

For many years, the hotel was known for its retro steakhouse — the now-closed Red Fox Room. It now relies only on Hope 46 for food and drink service. That venue will continue operating for the time being, Tafazoli said.

“We will rehab portions of the hotel and, as much as we can, keep the existing hotel operating, but regardless, we will have to shut down the entire property for a period of time,” he said.

Hotel analyst Alan Reay said that if the new ownership is able to eventually boost room revenue at the Lafayette above what the hotel realized more than a year ago, the $25.8 million acquisition is a good one. According to his records, the hotel generated $3.4 million in 2019, before the pandemic, but in previous years, average yearly revenue was closer to $5 million, which is good, Reay said.

“This is a one-of-a-kind hotel, so it lends itself well to someone who wants to take the food and beverage component to another level,” said Reay, who is president of Atlas Hospitality Group. “And the hotel really has tremendous character.”

Built in a grand colonial style in 1946 by a former car dealer and developer, the Lafayette was originally known as Imig Manor and had about 250 guest rooms, suites and apartments. In the 1950s, hotelier and then San Diego Charger owner Conrad Hilton purchased the hotel and eventually demolished and relocated several of the property’s apartment buildings, according to the hotel website.