Several new liquor license applications related to the 276-room hotel, 41 Tunnel Road in Berkeley, indicate that Redwood City-based developer and investor Ohana Real Estate is in the process of acquiring the hotel. The luxury Fairmont Hotel chain and financier Richard Blum, the late husband of Sen. Dianne Feinstein, bought the hotel nearly a decade ago.

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 newapplications. 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.

Representatives of Ohana and Fairmont Hotels did not immediately respond to requests for comment on Tuesday morning, but I’ll update this story if I learn more.

The acquisition price was not immediately available. FRHI Hotels &Resorts and the Blum group purchased the hotel from the Government of Singapore Investment Group in 2014 for $86 million— nearly $312,000 per room — and begun a multimillion-dollar renovation.

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. 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 landmark Berkeley hotel offers sweeping views of San Francisco Bay and a distinctive white castle-like exterior 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 than1,500 members.

It’s unclear whether Fairmont’s current management role will change with new ownership.

The hotel has been struggling to regain its pre-pandemic occupancy, according to the CMBS report. Average occupancy between 2013 and 2017 and, for the purposes of the loan, was projected to be 76.6% from 2018 to 2022. From June 2021 to last June, it was just 55%.

In 2022 the hotel generated revenue of about $62.8 million, compared with $40.4 million in 2021 and $21.9 million in 2020,when the hotel spent most of the year closed under pandemic operating restrictions.

Ohana developed and in 2021 sold the 130-room Montage Healdsburg luxury resort, located on 258-acres in Sonoma County, to publicly traded REIT Sunstone Hotel Investors for $265 million —for a near record-price of $2.04 million per key.

Per the terms of the sale, Ohana maintained its nearby collection of private residences and vacation home sites adjacent to the Montage Healdsburg.

Alex Barreira
Staff Reporter -San Francisco Business Times