West Hollywood’s Sunset Tower Hotel is slated to sell to a long-time stakeholder after going on the market last month. Hotelier Jeff Klein, who owns just under a quarter of the Sunset Strip property, is in escrow to buy the remaining stake for about $75 million, according to sources familiar with the deal. That would make the building’s full value $95 million, or $1.2 million a room.
The 81-room hotel was valued at $75 million in 2015, when ER Hollywood, an entity managed by New York investment advisory firm Elevated Returns, purchased an 80 percent stake for roughly $60 million.
Klein, along with partners, had purchased the building in 2004 for $18.5 million from Argyle Hotel Corp., and transformed the aging inn into a celebrity destination known for its Tower Bar and Restaurant and A-list events.
Klein declined to comment on the pending purchase, and a spokesman at Jones Lang LaSalle, the brokerage representing ER Hollywood, also declined to comment.
The $95 million price tag puts the Sunset Tower into an elite group of about half a dozen hotels in Southern California that have fetched more than $1 million per room.
The Loews Santa Monica Beach Hotel hit $1.4 million per room in its sale to Anbang Insurance Group Co. from Blackstone Group last March. The Malibu Beach Inn broke California records in 2015 when Hollywood mogul David Geffen sold it to Mani Brothers Real Estate Group for $1.7 million per room.
The Sunset Tower sale comes as more than 750 hotel rooms are under construction along the Sunset Strip at a value of roughly $1 billion - the first influx of ground-up building in West Hollywood in about three decades.
The New York Post first reported on the pending sale.