The Daily Transcript
07/31/19

Hyatt Regency La Jolla Garners $147M in Sale to Hong Kong Fund

The 14-story Hyatt Regency La Jolla hotel and the adjoining Sporting Club property have been sold for $147 million to GAW Capital Partners from Hong Kong.

By Thor Kamban Biberman

In what is being billed as the year’s most expensive lodging transaction in California, the Hyatt Regency La Jolla hotel and the adjoining Sporting Club space have been sold for $147 million in two separate transactions, according to Real Capital Analytics.

The sale price includes not just the real estate, but the furniture, fixtures and equipment. The exact price of the real estate itself couldn’t be confirmed.

The buyer of the Hyatt was Hong Kong-based GAW Capital Partners, according to CoStar. The sellers were identified by CoStar as Walton Street Capital and JMA Ventures.

The sale did not include the Aventine office building, which remains under a separate ownership.

The 417-room hotel and The Sporting Club previously sold for $118 million in May of 2015, according to CoStar.

The Hyatt, also known as the Hyatt at Aventine, is located at 3777 La Jolla Village Drive. Its rooms were recently updated.

The development features 17 suites, a pool, statuary, marble floors, 42,000 square feet of meeting spaces, a StayFit gym, three dining outlets, and wheelchair accessible rooms.

The Sporting Club is a 32,000-square-foot former gym space.

Both the 14-story hotel and the adjacent Aventine office building were developed by Jack Naiman in the late 1980s. The 219,987-square-foot Aventine office building and an adjacent retail building were last purchased for $150 million by The Rockpoint Group in June of 2015, according to CoStar.

Hyatt buyer GAW Capital is a private equity fund management company that focuses on global real estate markets. Its investments and developments cover an entire spectrum of real estate sectors, including residential development, commercial offices, retail malls, services apartments, hotels, and logistics.

Since its inception in 2005, the Hong Kong firm’s capital arm has raised five comingled funds targeting the greater China and Asia Pacific regions. The firm also manages value-add/opportunistic funds in the U.S. and Vietnam; a Pan-Asia hospitality fund; and a European Hospitality Fund among other ventures.

In all, GAW Capital has raised the equivalent of $13 billion since its inception, and manages approximately $23 billion in assets around the world.

When asked about the significance of the Hyatt sale, Atlas Hospitality Group president Alan Reay said, for now at least, it is a question of how high is up both in terms of price and in terms of hotel demand.

CoStar and Atlas Hospitality Group reported the year’s previous highest hotel transaction in California was Westbrook Partners’ nearly $127 million acquisition of the Loews Regency San Francisco.

The prices are not only climbing, the transactions are more frequent.

“Hotel transactions were up by 13 percent,” Reay said. “We were expecting to see a slowdown, but the appetite has been very, very strong, especially for trophy properties.”

Reay said what he is seeing is the reverse of the perfect storm.

“We are seeing record room revenues, record NOI (net operating income), and very favorable interest rates,” he said.

The hospitality industry expert said the hotel market continues to be strong, even with the growing presence of Airbnb.

“If Airbnb [wasn’t around], the market would be even stronger,” said Reay, adding it is hard for him to imagine a hotel market stronger than it is today.

“The demand for rooms has grown exponentially,” he said.

Reay, who said the current hotel market is basically a mirror image of the recession-fueled downturn in 2008, 2009, and 2010, said it is inevitable that there will be a downturn at some point.

“I just hope it’s a soft landing rather than a crash,” he said.

thor_biberman@sdtranscript.com