On February 9, 2015, the San Diego Union Tribune (
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"San Diego had priciest hotel sale in state
By Lori Weisberg | 4:22 p.m. Feb. 9, 2015
A change in ownership at the Hotel del Coronado last year gave San Diego County the distinction of having the priciest hotel transaction in the state during all of 2014.
Still, despite the more than $500 million valuation of the Hotel Del ownership change, San Diego still trailed other counties in terms of total sales last year, according to a report released Monday by Orange County-based Atlas Hospitality Group, a brokerage that tracks hotel transactions throughout California.
In all, San Diego County recorded 30 sales last year valued at nearly $799 million, up a modest 2 percent from a year earlier, but the volume of transactions fell far short of its 2011 peak of 42 sales worth nearly $1.9 billion.
Los Angeles County, with 66 sales priced at more than $1.1 billion, led the state in total dollar volume, followed by Orange County, San Francisco and then San Diego.
The 2014 tally for San Diego, though, likely understates the true valuation of all sales, because the single largest local transaction in terms of number of rooms -- The Town and Country resort in Mission Valley -- omits the value.
That's because Atlas Hotels, the longtime owner of the 956- room Town and Country, did not process the deed change with the county assessor's office in a way that would indicate a change in ownership.
Last year, Lowe Enterprises and AECOM Capital, the investment fund of AECOM Technology, acquired an interest in the Mission Valley hotel, which for decades has been owned by Atlas Hotels. The two entities formed a joint venture as part of a plan to both expand and significantly upgrade the aging property.
The assessor's office researched the matter over the last several months and concluded that there was indeed an ownership change in the property, which would in turn trigger a reassessment. A supplemental tax bill will likely be sent out in the next couple months once an appraisal of the 40-acre resort is completed, said Jeff Olson, a division chief in the assessor's office. The property's current valuation is more than $55 million, he said.
"We did not receive enough information (from the owners) to overcome the presumption that this is a change of ownership," Olson said.
Representatives of Atlas Hotels could not be reached for comment.
Alan Reay, president of Atlas Hospitality (no connection to Atlas Hotels), estimates that the reassessment could add an additional $100 million to San Diego's total sales valuation for 2014.
San Diego's flattening dollar volume of sales last year isn't surprising, says local hotelier Robert Rauch, considering the rising value of hotels, fueled by a much improved tourism economy.
"Today's owners don't want to give up their properties because times are so good right now," said Rauch, who owns and operates a number of San Diego County hotels. "Nobody wants to sell, unless at ridiculous prices, because the financial performance is at record highs, as are occupancy levels. I wouldn't sell because the values are continuing to rise."
Sales, especially of higher-end marquee properties, were especially robust in 2011 because savvy investors could foresee values were likely to soar, believes Rauch.
"Cash is king in a recession, and when you come out of a recession, you start buying and the smart money buys early," he said. "If I'm a hotel buyer now, I'm buying in markets just starting to recover, not in San Diego, where we've already recovered. We're buyers in Arizona right now because the market is just recovering now."
Some coastal areas, however, like Los Angeles and Orange Counties, did see a significant increase in the dollar volume of sales last year, and it is likely the overall number of transactions statewide could surpass this year's figure of 399, Reay believes.
"A lot of the stuff that's selling, people are retiring and getting out of the business, and some are taking their money and buying into other areas that have not peaked, like secondary markets in the Inland Empire and the Central Valley," he said. "Financing is readily available and still at historically low interest rates."