“This property is going to be a keeper,” said Sikand.
The recession hit the hospitality market hard. Just four hotels were sold in the county in 2009, down from 39 the previous year, according to Atlas. The largest buy that year was Brentwood’s 208-room Hotel Angeleno, which fetched $35 million.
That year, the hotel occupancy rate across the county fell to less than 64 percent from almost 71 percent in 2008. The average daily room rate for the county fell to $115 from about $129 in that period.
Sales made a big comeback in 2010 with 27, and then almost doubled the following year. In 2014, the market saw an all-time high of 66 transactions.
Investors were eager to take advantage of low prices to get a better return on their investments, said CBRE Hotels’ Lugosi.
“Coming out of the last recession, there weren’t a lot of places to open, which meant less competition,” he said. “Places got run down.”
That was the case with a Country Inn & Suites in Calabasas, which had fallen into bankruptcy. Malibu-based real estate investment group Channel West Group bought it from a Goldman Sachs Group Inc. subsidiary for $10 million in 2012, according to Managing Partner Steve McKenzie.
“We thought it was a great location and needed to be repositioned and renovated with a new concept,” said McKenzie. “It needed a lot of work.”
Channel West gutted the guest rooms and replaced the heating and air-conditioning system, reopening the property as the boutique Anza Hotel. The company sold the hotel at a price in the low $30 millions to a private family office in Honolulu in January of last year, said McKenzie.
Yet the number of transactions in 2016 was unchanged from the previous year, and still below the 2014 peak.
“We’ve seen over the past six years an incredible appreciation in values and revenues,” said Atlas’ Reay. “But buyers have started to say, How long is this going to last?”
Atlas projects a drop of 5 percent to 10 percent in the number of transactions in Los Angeles this year. As interest rates rise, lenders will raise the bar for underwriting, its report says.
There were three transactions in the county as of the end of February, compared with four during the same period last year, Reay said.
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