The 219-room Doubletree hotel in Mission Valley has sold for more than $49 million, marking the second hotel deal in a week.
Built in 1970, the Doubletree San Diego-Hotel Circle was sold to Oak Coast Properties, a four-year-old investment firm that invests in retail, residential and hotel properties.
Also selling in the last week was The Grand Del Mar, one of San Diego’s top luxury resorts. Purchasing the Carmel Valley property was financier Richard Blum’s private equity firm, Blum Capital, although the seller, “Papa” Doug Manchester – who is also publisher of U-T San Diego – will retain a minority stake. The transaction valued the 400-acre resort at $230 million.
The sale of the Doubletree involved two transactions, one a leasehold and the other land, which together totaled $49.25 million, according to CoStar Group, which documents commercial real estate transactions. The eight-story hotel property includes the Panini Restaurant, meeting and event space, an outdoor pool and spa, and a five-story parking garage.
“This was an opportunity for us to acquire a well-positioned asset with a world class brand in a very strong sub market of San Diego, Mission Valley,” said Phillip Nahas, a managing partner with Oak Coast. “San Diego’s economy and tourism, and this location, coupled with our renovation plans, make it an ideal investment for us.”
He said Oak Coast has plans to upgrade the entire hotel, including the rooms, meeting space, lobby and pool area during its first year of ownership. It was last renovated several years ago, he said.
While the hotel will retain the Doubletree brand, Oak Coast is partnering with Portfolio Hotels & Resorts to manage the property. The only other hotel Oak Coast currently owns is a Residence Inn in North Carolina.
Selling the hotel were Newport Beach-based Tarsadia Hotels and a group of Las Vegas investors, CoStar reported. CBRE Hotels brokered the sale. The brokerage is also handling the sale of the Doubletree San Diego-Del Mar, but that transaction has yet to close.
Orange County hotel analyst Alan Reay characterized the sales price, which works out to about $224,000 per room, as a fair one for both the buyer and the seller. He noted that a firm allied with Tarsadia already owns a number of hotels in the San Diego area, including the Hilton San Diego Mission Valley and Hampton Inn.
“They’re divesting their older hotel assets and moving into new construction,” said Reay, who heads Orange County-based Atlas Hospitality Group. “Right now, the prices people are paying for existing hotels are at or above replacement cost, so there’s a lot more interest in developing hotels.”