Utah investment firm acquires two Anaheim properties for more than $200 million

By Lou Hirsh | CoStar News | December 24, 2024 | 12:14 P.M.

An investor has snapped up two Anaheim hotels in California’s largest hospitality sales deal of 2024, the latest sign of a potential nationwide rebound in such transactions in the coming year.

Public document filings showed investment firm Dynamic City Capital of Provo, Utah, paid approximately $207.3 million for the 294-room Residence Inn, built in 2016 at 640 W. Katella Ave.; and the 174-room SpringHill Suites, built in 2014 at 1801 S. Harbor Blvd.

The seller was T2 Hospitality of Newport Beach, California. The buyer and seller did not immediately respond to requests from CoStar News to comment.

Home to Disneyland, Anaheim is historically among the nation’s most active regions for tourism and hotel demand.

The transaction price was the largest for Orange County hotel deals in 2024, and by far the largest in California, according to Alan Reay, president of hotel brokerage and research firm Atlas Hospitality Group in Newport Beach.

The deal price beat out other 2024 California hotel transactions including the $165 million sale of the Hilton Torrey Pines in San Diego, which closed in July, and the $80 million sale of Pacific Edge in Laguna Beach, which closed in June. After a generally slow year for hotel sales in California and the nation, more big deals could be coming in 2025 as interest rates and other economic conditions improve.

“For 2025, we are expecting sales activity to pick up as a lot of buyers that have been on the sidelines are now becoming more active,” Reay told CoStar News.

The Anaheim deal arrived as other analysts pointed to nationwide growth in the pace of hotel deals during 2024, especially in the second half. The trend is expected to continue into 2025 as investors are encouraged by easing interest rates and lenders become less wary of granting funds for acquisitions and new developments.

Looking ahead

Total U.S. hotel deal volume through the third quarter of 2024 was $15.4 billion, down 13.1% from the same period of 2023 and also 21.4% lower than the three-quarter period of pre-pandemic 2019, according to JLL Hotels & Hospitality.

However, the brokerage pointed to rising liquidity in 2024 for smaller properties valued below $50 million, with investors in that category better able to obtain financing locally or regionally if they had stable cash flow. Bigger hotel deals, those priced above $250 million, posted their highest level of liquidity improvement in three years as real estate investment trusts, institutional investors and hotel-focused funds became more active in transactions.

CoStar data showed Anaheim’s 72 hotels with nearly 5,700 rooms posted occupancy of 68.7% for the past 12 months, up 3.4 percentage points from the prior year. Revenue per available room rose 0.5% over the past year, though average daily room rates declined 2.8%.

Orange County overall joined many California regions posting slowdowns in hotel demand during 2024, especially among domestic travelers, due to factors that included inclement weather and spending pullbacks by consumers and businesses.

“While performance has slowed this year, it is forecast to improve in 2025 as leisure travel trends stabilize and inbound international travel is expected to grow,” according to a market report by Emmy Hise, senior director of hospitality analytics for CoStar Group.

Similar to national trends, hotel investment in Orange County significantly cooled in the past 12 months, with just $424 million in sales volume, well below the three-year average of $679 million, Hise noted.

Upcoming hotel deal prices in Orange County could remain elevated as construction remains low by historical standards due to still-high financing rates. In the past 12 months, only two hotels with a total of 300 rooms opened in the region, and only two hotels are currently under construction with 235 rooms to be delivered to market through 2026, according to CoStar data.

There are currently no Anaheim hotels under construction, and no new rooms have been delivered to market in the city over the past 12 months.