When many large hotel chains are selling properties these days, Global Hyatt Corp.'s anticipated take-over of the Century Plaza may not be out of line.
Hyatt will manage the hotel, but the property will be purchased by Sunstone Hotel Investors Inc., a San Clemente-based real estate investment trust that specializes in buying high-end hotel properties.
The arrangement is another example of how hotel companies operate today. Instead of owning the hotel outright, a separate company buys the property and the hotel firm enters into a long-term management contract.
"Hyatt can take a more strategic, long range view to how they spend their money," said Bruce Baltin, a senior vice president with hotel tracking firm PKF Consulting.
The price, $403,000 for each of its 728 rooms, is a record-setting amount for a California hotel, according to Alan X. Reay, president of hotel brokerage and consultancy Atlas Hospitality Group Inc. "That's going to be the highest price per room paid this year," said Reay, who was not involved in the deal.
Bidding on the Century Plaza was very aggressive, according to several sources close to the transaction. Starwood Hotels & Resorts Worldwide Inc., a publicly traded company, was a runner-up to buy the property but in the end couldn't top Sunstone's offer.
Baltin said the price isn't out of line. "It's aggressive but it's not out of step," he said. "The Century Plaza is an asset companies are willing to accept lower returns on because it's such an important hotel."
The purchase also gives Hyatt staying power in the L.A. market. The company lost control of downtown's Hyatt Regency Los Angeles when the hotel was sold earlier this year. It is now called the Sheraton Los Angeles.
Hyatt will continue to manage the nearby 366-room Park Hyatt Los Angels, also in Century City, according to Hyatt spokeswoman Katie Meyer. The Park Hyatt is owned by Tokyo-based Sumitomo Realty & Development Co. Ltd.
In L.A., Hyatt owns and manages only one hotel the 262-room Hyatt West Hollywood, located on the Sunset Strip.
Calls seeking comment from Sunstone weren't returned. Francis Najafi, chairman and chief executive of Pivotal Group, which owns the Century Plaza, declined to comment.
Pivotal Group was represented in the deal by Steven L. McKenzie, a managing director at Eastdil. McKenzie declined to comment.
Chicago pension fund advisor LaSalle Investment Management Inc. has agreed to buy 505 N. Brand Blvd. from CB Richard Ellis Investors, a division of brokerage CB Richard Ellis Group Inc., for about $116 million, according to sources close to the deal.
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