In the largest hotel transaction in the LAX area since 9/11, the Sheraton Gateway Hotel LAX is under contract to be sold for nearly $82 million, according to sources close to the deal.
What's more, several large nearby hotels comprising more than half the rooms near the airport could soon follow, according to additional sources.
Kor Hotel Group Inc., a subsidiary of The Kor Group Inc., is selling the 802-room property the fifth largest hotel by number of rooms in L.A. County for nearly double what the firm paid three years ago.
While the roughly $100,000 per room price is low by L.A. County standards, it marks a high-water point for the hotel submarket surrounding Los Angeles International Airport.
"They're attracting institutional demand, where they weren't before," said Bruce Baltin, a senior vice president at hotel tracking firm PKF Consulting. "They are attracting a sophisticated buyer who has previously steered clear of that market."
The Sheraton Gateway deal, in which the buyer was not disclosed, comes on the heels of Starwood Hotels & Resorts Worldwide Inc.'s sale of the 740-room Westin Los Angeles Airport to Host Marriott Inc. as part of a national portfolio transaction.
The two trades and the high prices that the properties fetched haven't been lost on other LAX hotel owners, one of whom has decided to put its hotel on the market while another is said to be seriously considering a sale.
Cumulatively, the four properties that either traded hands or have been listed for possible sale contain 2,686 rooms, or 57 percent of the hotel rooms along Century Boulevard between the San Diego (405) Freeway and the airport's entrance, according to PKF Consulting.
The sales activity is partly due to a resurgence in business at the hotels, which were some of the worst affected by the fallout from the Sept. 11, 2001 terrorist attacks. At their lowest point, the hotels were half empty and rates already some of the lowest in the county dropped to $70 a night. The prevailing rate at the time was $110.
During the last two years, occupancy at Century Boulevard hotels jumped nearly 16 percent to finish last year with an average 83 percent of the rooms rented on a nightly basis one of the highest rates in L.A. County.
"The market has fully rebounded," said Alan Reay, president of Irvine-based hotel consultancy and brokerage firm Atlas Hospitality Group Inc. "It's a very strong market now and owners are starting to capitalize on it."
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