Two Years After $60 Million Sale, Citizen Hotel on the Market Again
Two Years After $60 Million Sale, Citizen Hotel on the Market Again
Sacramento Business Journal
02/09/18
Two Years After $60 Million Sale, Citizen Hotel on the Market Again
By Mark Anderson
The Beverly Hills-based investment firm that bought the Citizen Hotel for $60 million just over two years ago has put the boutique property back on the market.
No price is listed in the memorandum on the property by brokerage firm JLL’s San Francisco and Los Angeles offices.
The hotel is owned by private equity firm Platinum Equity.
The 196-room hotel at 10th and J streets downtown also features Grange Restaurant & Bar and 10,000 square feet of flexible meeting space.
County records show Platinum paid $60 million for the hotel in September 2015, which was believed to be a record sale price for a Sacramento hotel at the time. And in the years since, the performance of Sacramento hotels has improved.
Downtown hotels are generally considered attractive investments, and in major cities, hotel valuations have shot up in recent years, said Alan Reay, president of Atlas Hospitality Group, a brokerage in Irvine.
“In San Francisco or Los Angeles, to break those deals loose, you have to pay a high, high price,” Reay said. That is why investors are going to smaller cities and “markets that are overlooked” to buy properties.
“Downtown Sacramento is seeing a tremendous amount of buyer interest,” he said.
Platinum Equity bought the Citizen from Cal West Partners, the local partnership that developed the hotel. Cal West, managed by Rubicon Partners Inc. of Sacramento, had converted a historic office building dating from1925 into the Citizen, which opened in 2008.
The 14-story hotel also has rights to 183 parking spaces in a city garage at 10th and I streets.
When Platinum bought the Citizen, it brought in Crescent Hotels & Resorts to manage the property. Platinum also switched the reservation system from Joie de Vivre to Marriott International Inc. The Citizen is now part of the Autograph Collection, Marriott’s (Nasdaq: MAR) portfolio of unique boutique properties.
“Platinum is an opportunistic investor, and it looks to exit and make a quick profit,” Reay said.
Representatives of Platinum could not immediately be reached for comment.
The Citizen had a contract that recently expired for the hotel to provide accommodations to airline flight crews, according to the flyer from JLL. Such contracts tend to be for low room rates, but they provide consistent business for hotels. With the contract expiring, about 10 percent of the Citizen’s total room-night demand is no longer contracted at $79 per night, according to the flyer.
Average hotel room rates in Sacramento were $122.80 per night through October last year, up 7 percent from the same period in 2016. Average occupancy was 80.1 percent, up from 75.9 percent the year earlier, according to research from CBRE Hotels in San Francisco. As an industry standard, hotels generally start making a good profit at occupancies over 70 percent.
