New York-based developer Related Cos. was closing in on a deal to purchase the St. Regis hotel last week, with plans to convert the Century City property into condominiums, according to sources close to the transaction.
The agreement, expected to be finalized late last week, would have Related paying a consortium led by Phoenix-based Pivotal Group Inc. about $125 million for the struggling hotel, which was put on the market in August.
It would also place Related in the middle of a searing labor dispute. The hotel's 200 unionized workers, along with those at eight other hotels in the L.A. area, are locked in a stalemate over terms of a new contract to replace one that expired in April.
With the dispute potentially flaring into a strike or lockout, officials with Unite HERE make no secret of their plans to draw Related into their battle with nationwide hotel chains.
"We are extremely concerned," said Maria Elena Durazo, president of the union's Local 11. "We are going to do all we can to protect those 200 jobs so workers don't end up on the street."
One thing the union could do is place pressure on L.A. officials not to approve the condo conversion, arguing that the loss of nearly 300 luxury hotel rooms will result in lost city hotel and sales tax revenues.
Related is also in negotiations with the Grand Avenue Authority, made up of administrators and elected officials from the city of Los Angeles, as well as L.A. County, for development of the $1.2 billion Grand Avenue mixed use project in downtown L.A.
Since Related hadn't yet provided a non-refundable deposit for the St. Regis property, sources warned last week that the deal could fall apart.
Related spokeswoman Alicia Goldstein said company executives had no comment. Pivotal Chairman and Chief Executive Francis Najafi didn't return calls seeking comment.
At nearly $421,000 for each of the hotel's 297 rooms, the St. Regis sale would become the most expensive hospitality transactions in California this year, according to Alan Reay, president of Costa Mesa-based hotel consultancy and brokerage firm Atlas Hospitality Group.
"That's a record price per room," Reay said. "At that price it makes sense only if you do a condo conversion."
It's unclear if the sale depends on Related being able to secure rights from the city for the conversion. Steven L. McKenzie, managing director of Eastdil Realty, which has the listing, declined comment.
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