A European hotel developer has paid $28 million for a Sunset Strip property approved for the development of a 196-room hotel.
The developer, using the name 8950 Sunset Blvd. Inc., bought the vacant 1.13-acre site at 8950 W. Sunset Blvd., west of San Vicente Boulevard in West Hollywood, from James Hotel West Hollywood LLC, according to CoStar Group Inc.
The operators of the boutique chain of James hotels paid $16.4 million for the site in 2005, according to county records. The site was approved for a six-story, 196-room hotel with four extended-stay or residential units. The project was to include about 26,000 square feet of ground-floor restaurants as well as meeting and conference space.
The attorney for the James Hotel project did not return calls, but a source said it had struggled to find financing for the project. James Hotels sold two other properties, one each in New York and Chicago, to Denihan Hospitality Group in 2008. The West Hollywood site, approved for hotel development 14 years ago, has had its entitlements extended six times, the most recent a two-year extension in 2011.
Sources said the new developer plans to start construction by October to avoid a $1 million penalty the city of West Hollywood built into its agreement with the James Hotel.
It was unclear who the principals behind 8950 Sunset Blvd. are, but a source familiar with the transaction said the buyer was a European hotel developer that has built luxury hotels in the Middle East. It is planning a five-star hotel at the site.
The purchaser is registered at the Century City law office of Wafa J. Hoballah. Hoballah, who declined comment, is admitted to practice in New York and Lebanon and specializes in business, commercial and corporate law in the United States, the Middle East and West Africa, according to her company’s website.
Broker Tony Azzi at the West L.A. office of Marcus & Millichap represented both sides in the deal but declined to comment.
Alan X. Reay, president of Irvine travel and hotel consulting group Atlas Hospitality Group, said he was stunned the developer walked away.
“It’s surprising, as strong as the hotel market is, that they couldn’t get that deal done,” Reay said.
Hotel occupancy on the Sunset Strip is in the 70 percent range, he said. Rates begin at $275 a night. And development activity is heating up there. Marriott International Inc. is planning to build an Edition hotel, one of its luxury brands, nearby at the corner of Sunset and Doheny Drive. It recently purchased the land for $31.5 million and plans a 190-room hotel.
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