Dana Point Resort Is Sold to Japan Firm
The oceanfront Dana Point Resort has been sold to a Japanese garment industry giant for about $104 million in what is one of the largest real estate deals in the Southland this year.
The price represents a doubling in the value of the 12-acre property overlooking Dana Point Harbor in Orange County, built for $50 million in 1987, and demonstrates the torrid appreciation of coastal property.
Edward Thomas Cos., owned by Beverly Hills hoteliers Edward and Thomas Slatkin, said the sale to Tokyo Masuiwaya California Corp. of Japan, the investment arm of Japan’s leading kimono maker, was completed Tuesday. The Slatkins acquired the resort in February, 1988, for $65 million from Southmark Pacific Corp. in Pasadena.
Management to Be Retained
The Slatkins, whose family owned the Beverly Hills Hotel for 30 years, said in an interview Tuesday that Masuiwaya officials did not discuss plans for the resort with them but did retain the existing management.
Masuiwaya officials declined to discuss the deal, according to a spokeswoman at Yasuda Bank & Trust in Los Angeles, which represented the Japanese firm in the deal. Masuiwaya of California also owns the Cliffs resort, a new property near Pismo Beach, and La Jolla’s Colonial Inn, an older, 10-room oceanfront resort.
Real estate industry consultants said the price is a record for a single property in Orange County by a Japanese buyer and is one of the highest prices paid for a hotel in the United States.
Since 1986, according to COMPS Inc., a San Diego research firm, the only Orange County real estate deal that approaches the Dana Point Resort sale was the 1988 acquisition of two Pacific Mutual Life Insurance Co. office buildings in Newport Beach for $83 million by the California State Teachers Retirement System.
Despite the huge appreciation that the Dana Point Resort sale represents, the price is not out of line for a coastal resort, industry analysts said.
“If you look at recent hotel sales in Southern California, like La Costa Resort (in San Diego County) that sold for $250 million and Hotel Bel Air for $110 million, it is in keeping with what is happening,” said Jim Burba, a partner in the Costa Mesa office of Pannell Kerr Forster, an accounting firm and consultant to the hotel industry.
“Prime hotel property in Southern California is selling at very high prices in comparison to other parts of the U.S. because this is perceived to be a strong economy and a strong market,” Burba said.
Promising O.C. Resort Center
In Orange County, Masuiwaya is buying into an area that has a promising future as a resort center, said Richard N. Kipper, a partner at Laventhal & Horwath in Costa Mesa. Developers have approval to build nine hotels as part of three projects, along the Irvine Coast between Corona del Mar and Laguna Beach, in Huntington Beach and in Dana Point.
“The Japanese have to be aware of the plans for several major high-end resorts on the Orange County coast and are interested in coming in at the start of the creation of a prime resort environment,” he said.
Thomas Slatkin said the resort’s occupancy rate currently is about 75%, up from only 50% last year. A 75% occupancy rate is considered good in the resort industry.
“We upgraded and repositioned the hotel and refocused it to the resort business, and that had a lot to do with the price,” Slatkin said.
The sale does not, he said, represent an exit from the hotel business by the Edward Thomas Cos.
“The only thing you can read into this sale is that on a highly leveraged acquisition that we put almost no cash into, we got nearly 60% appreciation in one year and made an enormous amount of money,” Slatkin said.
He said he and his brother intend to take the profit from the sale and “buy or build a fabulous new hotel or other business in the consumer field.”
Harry Hartnett, a consultant with Kenneth Leventhal & Co. in Newport Beach, said the Dana Point Resort deal is a continuation of the Japanese pattern of acquiring so-called “trophy” hotel properties that have a high visibility and prestige.
“They did it first in Hawaii, and now that they have bought most of the major hotels there, they are turning to California,” he said.
In recent years, Japanese investors have acquired the Hotel Bel Air in Beverly Hills, La Costa Resort Hotel and Spa in Carlsbad and the Westin chain, which includes the Westin South Coast Plaza in Costa Mesa and the Westin Bonaventure in Los Angeles.
DANA POINT RESORT
Opened: August, 1987.
Location: 11.6 acres on bluff overlooking Dana Point Harbor.
Rooms/rates: 350 from $160 to $1,050 per night.
Occupancy: 75% this year, 50% last year.
Ownership: Built by Southmark Pacific Corp. for $50 million.
Acquired February, 1988, by Edward Thomas Cos. for $65 million.
Bought July, 1989, by Tokyo Masuiwaya California Corp. of Japan for about $104 million.
