L.A. Hotel Is Expected to Sell for Half Its Cost
A group of wealthy Asian investors is purchasing the swank 17-story Inter-Continental Hotel in downtown Los Angeles for about $50 million, half of what it cost to build just four years ago, according to industry sources.
The 439-room Inter-Continental is the latest Southern California property unloaded by debt-ridden Japanese banks, which took over troubled properties purchased at the peak of the Japanese investment boom in the 1980s.
The buyers have primarily been U.S. institutional buyers and investors from other parts of Asia, including Hong Kong, Taiwan, mainland China, Singapore and Indonesia.
The purchaser of the Inter-Continental Hotel is Financial Capital Investment Co., a Los Angeles-based consortium representing a group of Asian investors, sources said.
Financial Capital is buying the note for the property from the Long Term Credit Bank of Japan, which was the major creditor. The property was owned by Tobishima Development Corp., a large Japanese real estate firm.
In recent years, Financial Capital has invested in at least eight hotel and office buildings in California, including 801 Figueroa, 811 Wilshire and Japanese Village Plaza in Los Angeles, Hilton Hotel at the Club in Pleasanton and Fairfield Inn in Mission Viejo.
Lewis Fader, general manager of the Inter-Continental, said he could not comment on the reports of a pending sale. He said Inter-Continental Hotels & Resorts, a London company, has a long-term management contract that would continue regardless of a sale.
Executives of Long Term Credit Bank and Financial Capital could not be reached for comment. The sale is expected to be finalized by the end of this year, according to industry sources.
The Inter-Continental, in the California Plaza mixed-use development on Bunker Hill, is near the Museum of Contemporary Art, the Music Center and the site for the proposed Walt Disney Concert Hall.
When it opened in 1992, the hotel encountered opposition from the Hotel and Restaurant Employees Local 11. The Inter-Continental is the only major nonunion hotel in the downtown area.
The Inter-Continental suffered at first from the travel slowdown that accompanied the California recession and the 1992 riots. But the new owners are inheriting a healthier property because of a turnaround in the downtown Los Angeles hotel business.
In the first nine months of this year, downtown hotels averaged 61% occupancy, up from 52% for the same period the previous year. And average room rates are up 4% over last year, according to Bruce Baltin, senior vice president for PFK Consulting, a hospitality and real estate consulting firm.
Baltin said Los Angeles hotels are benefiting from an increase in conventions and international visitors, a trend expected to continue for at least several years.
