May 27 (Bloomberg) -- Strategic Hotels & Resorts Inc. agreed to buy the portion of the Hotel del Coronado it doesn’t already own from joint-venture partner Blackstone Group LP in a deal that values the property at $787 million.
The lodging company will pay $210 million for the 63.6 percent stake, and assume an existing mortgage of about $475 million, Chicago-based Strategic said in a statement. The property’s total value excludes about $18 million of cash in the venture.
Blackstone, based in New York, bought a majority stake in the San Diego-area hotel in 2011 and formed a joint venture with Strategic and KSL Resorts to recapitalize the oceanfront resort. The Hotel del Coronado, featured in the 1959 Billy Wilder film “Some Like It Hot,” was valued at about $590 million at the time of that purchase, according to Strategic.
The hotel “is experiencing excellent growth” and “is expected to outperform in the coming years given the lack of any new supply in the San Diego market,” Strategic Chief Executive Officer Raymond “Rip” Gellein said in today’s statement. “The hotel is not encumbered by a long-term hotel-management contract, which creates additional flexibility and value as owner of this property.”
The 757-room hotel’s revenue per available room, an industry measure of average daily performance, grew 11 percent in the first quarter, according to Strategic.
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