Luxury Montage Resort Sells for $360 Million to StrategicNadja Brandt
Strategic Hotels & Resorts Inc., whose properties include the Ritz-Carlton Half Moon Bay in California, added to its holdings in the state with the $360 million purchase of the Montage Laguna Beach luxury resort.
The purchase of the 250-room property was funded by issuing
7.35 million shares of common stock valued at $100 million, assuming a $150 million mortgage backed by the hotel and using existing cash, Chicago-based Strategic said Thursday in a statement. The seller is an affiliate of Ohana Real Estate Investors, started by EBay Inc. founder Pierre Omidyar.
Strategic, which last June acquired Blackstone Group LP’s stake in the luxury Hotel del Coronado near San Diego, has been adding luxury resorts to its portfolio with the expectation that a rebound in corporate travel will accelerate, Chairman and President Raymond “Rip” Gellein said in November.
The Montage Laguna Beach purchase fits Strategic’s strategy of acquiring “world-class luxury hotels located in North America,” Gellein said in the statement. “The Southern California market generally, and the coastal Orange County market specifically, have been among the highest-rated markets in the country and are poised to continue their strong growth.”
Montage Hotels & Resorts will continue to manage the resort, which sits atop a 50-foot (15-meter) bluff overlooking the Pacific Ocean and has 16,000 square feet (1,500 square meters) of indoor meeting space and a 20,000-square-foot spa. Omidyar is an investor in Montage.
Luxury resorts, shunned after the real estate crash because they’re expensive to run and suffer during recessions, are back in demand as investors seek to capitalize on the economic rebound, record corporate-travel spending and little construction, David Loeb, an analyst at Milwaukee-based Robert W. Baird & Co., said last month.
The Montage Laguna Beach is expected this year to achieve an average daily rate of almost $600 and total revenue per available room, an industry measure of occupancy and rates, of more than $1,000, Strategic said.
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