DOUGLAS YOUNG Staff Reporter
A group of Taiwanese investors led by local real estate brokerage Financial Capital Investment Co. of West L.A. purchased the Hotel Inter-Continental last week for about $40 million less than one-third the hotel’s original development cost.
The property was sold by a group of Japanese investors including Tobishima Development Corp. and the Long Term Credit Bank of Japan, which built the 439-room hotel in 1992 for $125 million.
The selling group had about $100 million in outstanding debt on the hotel, which was the last major property to be developed on downtown’s Bunker Hill before the recent recession.
As part of the deal, Taiwanese buyers will retain the hotel’s current management, which is based in England but owned by the parent of Tobishima. Most of the payment for the hotel will be in cash a common practice among Taiwanese investors.
The Inter-Continental transaction, which the Business Journal first reported Nov. 18 as pending, is the latest in a string of major U.S. real estate sales by Japanese banks and investors.
Companies like Tobishima developed and purchased trophy properties in the U.S. at the height of the market in the 1980s, only to see values plummet in the recession of the 1990s.
Many of those properties have been sold at a fraction of their original price in recent years, as the Japanese government pressures firms to clear their books of non-performing assets and write off the loses.
The Inter-Continental is the third major L.A. hotel purchased by Chinese buyers from Japanese investors in the past year.
The Inter-Continental sale differed from many of the previous deals, because the property was never officially put on the market and the Taiwanese group initiated the transaction, according to Financial Capital managing director Eddy Chao.
In one of the two similar deals last year, a group of Hong Kong investors purchased the Regent Beverly Wilshire in Beverly Hills last February from a limited Japanese partnership for $100 million.
Another Hong Kong buyer purchased downtown L.A.’s Biltmore Hotel in June from a group of Japanese investors for $62 million. The Japanese seller of the Biltmore paid an estimated $219 million for the property in 1989.