OAKLAND — The iconic Marriott Hotel, a high-rise landmark in downtown Oakland, has been bought by a joint venture led by veteran realty firm DiNapoli Capital Partners.
The hotel was bought for about $84 million, according to sources familiar with the transaction.
“This shows that downtown Oakland is a very strong market,” said Alan Reay, president of Atlas Hospitality Group, which tracks the hotel market in California. “Prices for hotels are being pushed up in San Francisco, and that has pushed up interest in buying hotels in all the other markets, such as the East Bay and the South Bay.”
CIM Group, through an affiliate, sold the 21-story hotel, which has 489 rooms, CIM said Monday. The buyer was a joint venture of DiNapoli Capital and Apollo Global Management, a private equity investment firm.
In 2007 CIM bought the Oakland City Center Marriott, along with the 162-room Courtyard Oakland Downtown. At that time, CIM paid $66 million for the two hotels together.
The realty firm undertook a wide-ranging renovation of the Oakland Marriott that was completed in 2011. CIM later teamed up with the city of Oakland for a renovation of the 89,000 square feet of meeting spaces in the hotel and the adjacent Oakland convention center.
“CIM identified downtown Oakland as an urban market with key attributes such as solid infrastructure and a walkable environment that was poised to benefit from its position in the Bay Area and easy access to San Francisco,” said Shaul Kuba, CIM’s co-founder and principal executive. “CIM repositioned the hotel, increased its value and created a stabilized commercial asset.”
The hotel market has turned hot throughout the Bay Area with a rebounding economy and sizzling job market.
“Any hotel property that comes on the market that is priced within reason is going to sell,” Reay said. “There is a huge imbalance between the number of buyers and so little product available for sale. That’s driving prices up.”
CIM’s purchase in 2007 of the two hotels together represented a price of about $102,000 a room. The sale of the Oakland City Center Marriott represents a price of $172,000 a room — 68 percent higher than the sale in 2007.
“All boats rise on a high tide, the economy is very robust, people recognize the quality of life in Oakland is good,” said Ken Meyersieck, executive vice president and manager of the Oakland office of Colliers International, a commercial realty firm. “Office tenants are moving into Oakland or expanding and residential projects are in the queue and will start in six to 12 months.”
DiNapoli has plenty of experience with downtown hotel properties. The DiNapoli firm owns the 353-room Hilton in downtown San Jose. Neither DiNapoli nor its venture partner would comment about their purchase in downtown Oakland.
The downtown has added numerous restaurants and entertainment centers in recent years. Coupled with more residences and office tenants, that’s increased the nightlife in downtown Oakland.
“Downtown Oakland is definitely headed in the right direction,” Meyersieck said. “It’s encouraging to see that the downtown is getting a lot of interest from institutional investors like Apollo.”