PICO BLVD — The Sheraton Delfina Santa Monica Hotel has been purchased for $102.8 million by a Maryland real estate investment trust with plans to spend another $9 million to refurbish guest rooms and common areas.
Pebblebrook Hotel Trust said earlier this week that it bought the upscale, 310-room hotel on Pico Boulevard across the street from Santa Monica High School. The 10-story hotel was built in 1972 and expanded in 1984, Pebblebrook said. It was remodeled in 2005 at a cost of $11 million.
The price of nearly $332,000 per room, although not a record, is at the higher end of what hotels are going for and is a sign of the higher prices being paid for top-end properties, hospitality experts said.
The Delfina was more than 80 percent occupied in 2009 at an average daily rate of $179, Pebblebrook said.
Jon Bortz, Pebblebrook’s chairman, president and CEO, said in a statement to the press that the Santa Monica market is a highly popular year-round destination for both leisure and business travel, attracting large groups as well as families. He cited “extremely high barriers to entry in the market” among the factors favoring the location. He also mentioned the planned transformation and expansion of the Santa Monica Civic Center as being a draw. The hotel will continue to be managed by the Viceroy Hotel Group, which has managed the property since 2003.
“Viceroy has had great success with the property and they are very knowledgeable of the unique Santa Monica hotel market,” Bortz said. “We look forward to working with them on the Sheraton Delfina Santa Monica Hotel and future opportunities, as their knowledge and experience in operating distinctive boutique-style properties … gives us great confidence in the future for both our relationship and the property. ”
Pebblebrook bought the Delfina from a group headed by hotelier Brad Korzen that acquired a 60 percent interest in 2000 for $34 million and the remaining 40 percent in 2001 for $36 million, according to www.globest.com.
Pebblebrook estimates the hotel will generate earnings of $7.4 million to $7.9 million before interest, taxes, depreciation and amortization.
Enhancements to the hotel are expected to begin in the next 18 months.
The Sheraton Delfina marks the seventh acquisition for Pebblebrook since completing its initial public offering in December 2009.