Blackstone unit gets majority ownership of Hotel del Coronado
The historic Hotel del Coronado, one of the country’s most legendary inns, has a new majority owner —Blackstone Real Estate Advisors, a division of Wall Street powerhouse Blackstone Group.
Blackstone stepped in as the previous majority owner, Strategic Hotels & Resorts, faced a $630-million loan balance due this month. The recapitalization with Blackstone values the hotel at about $590 million and gives Blackstone a 60% ownership interest, Strategic Hotels said Monday.
Strategic Hotels retains 34.3% of the ownership, and La Quinta-based KSL Resorts, the hotel’s operator, retains 5.7%. Deutsche Bank provided a $425-million loan for the deal.
“We are very pleased by this outcome, as it provides the opportunity for us to achieve attractive returns on our new investment, significantly reduces the hotel’s indebtedness and maintains our ownership in this iconic asset,” said Laurence Geller, chief executive of Strategic Hotels.
Built in 1888, the red-roofed Hotel del Coronado on the ocean near San Diego has hosted 11 U.S. presidents starting with Benjamin Harrison and a slew of celebrities including Charles Lindbergh, Thomas Edison and Babe Ruth. It was the backdrop for the 1959 Billy Wilder comedy “Some Like It Hot.”
Chicago-based Strategic Hotels, which also owns the Ritz-Carlton in Dana Point and Loews Santa Monica Beach Hotel, paid $745 million for the Hotel del Coronado in 2005, hotel consultant Alan Reay said.
Blackstone’s move “is an endorsement of the hotel industry,” said Reay, president of Atlas Hospitality. “People are getting back in from an investment standpoint.”
The high-end hospitality market was crushed during the recession and shares of Strategic Hotels fell from a high of nearly $24 in 2007 to as low as 65 cents in 2009. The stock closed up 38 cents, or 6.3%, at $6.59 after the Hotel del Coronado recapitalization was announced.
