Content area
Full Text
With Silicon Valley's hard-hit hospitality sector showing renewed signs of life, a prominent Bay Area hotel company has outbid numerous suitors to acquire one of the properties bestpositioned to ride the market back.
San Francisco's Stanford Hotel Corp. purchased the 280-room Hilton Santa Clara adjacent to the Santa Clara Convention Center and within the valley's so-called Golden Triangle. Stanford, which now owns and operates 17 hotels including other Hiltons throughout California and a handful of other states. It purchased the tech-heavy, mid-sized convention hotel from the Southern California development partnership that had built it four years earlier.
Officials at Stanford and the development group agreed to keep the price confidential, but hospitality investment specialists estimate the Hilton traded for $38 million to $40 million, which factors to roughly $135,000 to $143,000 per key. Overall construction costs came in at roughly $33 million, indicating that the sellers likely turned a profit.
With mortgage lenders now looking to sell the foreclosed 357-room Fremont Marriott, Valley hospitality officials were justifiably concerned that the Hilton might trade at a fire-sale price. But investment capital has begun aggressively chasing hotel acquisition opportunities nationwide as business and recreational travel continue to recover from the economic recession and post-9/11 trauma.
Bidding for the hotel was intense, says Clyde Guinn, Stanford's senior vice president of operations. "Given all the investment funds and REITs aggressively pursuing hotels these days, it was difficult for us as a mediumsized...