PaineWebber Real Estate Securities has purchased the Inn at Laguna Beach as well as four other luxury hotels from the Coastal Hotel Group for an undisclosed sum.
Officials from PaineWebber and Coastal could not be reached for comment. In a press release, the companies said Tuesday that they have formed a partnership that will provide Coastal with capital for expansion. As part of the arrangement, PaineWebber has purchased the California hotels.
Hotels have become hot properties again as the economy booms. Strong tourism and business travel have kept vacancy rates low, while room rates in California have begun climbing again.
Alan Reay, president of the Atlas Hospitality Group, estimated that the 70-room hotel, which overlooks the Pacific Ocean, could command a price of at least $14 million, or $200,000 per room. “A price of more than $200,000 per room would not be unrealistic,” Reay said.
Chicago-based Coastal purchased the hotel in the 1980s and sold it to a Japanese firm in 1990 for $21 million. Coastal repurchased the property in 1993 for $7.5 million when the hotel fell into foreclosure, analysts said.
By 1996, Olympus Real Estate Corp. of Dallas joined Coastal and its affiliate, Chicago-based Huron Partners Inc., in forming a partnership to purchase the five California hotels that now have been sold to PaineWebber.
Those include the Hotel Pacific, Monterey Bay Inn, Victorian Inn and Spindrift Inn, all in Monterey. Coastal will continue to manage those properties.