Redwood City investor pays unknown price for the 276-room property appraised at $183 million

MAY 10, 2023, 11:38 AM
By TRD Staff

Ohana Real Estate is buying the 108-year-old Claremont Hotel & Spa, which straddles Berkeley and Oakland. 

The Redwood City-based investor is acquiring the 276-room hotel at 41 Tunnel Road in Claremont, the San Francisco Business Times reported, citing liquor license applications. Terms of the deal were not disclosed.

The seller is Toronto-based FRHI Hotels & Resorts, which owns the luxury Fairmont Hotel brand, and the Blum Group, owned by financier Richard Blum, the late husband of Sen. Dianne Feinstein.

They bought the landmark hotel in 2014 for $86 million, then launched a multimillion-dollar renovation.

Executives of Ohana Real Estate Investors — including Ohana’s chief financial officer, an asset management partner, and vice president of asset management — were named in the new applications, according to the Business Times.

The entity behind the applications is at the same mailing address as Ohana in Redwood City.

The hotel property is anchored by a $120 million commercial mortgage-backed securities loan, which was refinanced in 2019 for $125 million and set to mature in July. A CMBS industry report notes “the property was listed for sale recently and is presently under contract” as of last month.

The hotel was appraised in July 2022 for a value of $182.8 million, which would work out to $662,318 per key. 

“There’s still a tremendous demand for California trophy assets,” said Alan Reay, president of Atlas Hospitality Group, mentioning the recent sale of San Francisco’s Huntington Hotel in Nob Hill and the ongoing effort to sell the Stanford Court Hotel. “It obviously fits in with Ohana’s acquisitions of larger-sized business hotels and trophy assets.” 

Built in 1915, the grand hotel offers sweeping views of San Francisco Bay from atop its 22-acre East Bay estate. The hotel also includes a 20,000-square-foot luxury spa and a private health club with more than 1,500 members. 

The hotel, operated by Fairmont, has struggled to regain its occupancy since the pandemic, according to the CMBS report. Average occupancy was projected to be 76.6 percent from 2018 to last year. From June 2021 to last June, it was 55 percent..

The Claremont took in $62.8 million last year, compared with $40.4 million in 2021 and $21.9 million in 2020, when the hotel spent most of the year closed because of pandemic shutdowns.

In 2021 Ohana sold the 130-room Montage Healdsburg luxury resort on 258 acres in Sonoma County to Sunstone Hotel Investors for $265 million, or a near record $2 million per key. 

In December, Ohana Real Estate acquired the 174-room Tillary Hotel and a 64-unit apartment building in Brooklyn after an ugly bankruptcy battle. 

— Dana Bartholomew