The 120-room L’Auberge Del Mar luxury resort has been sold to a unit of Bethesda-based LaSalle Hotel Properties for a reported $76.9 million, or $640,833 per room.
“This is a huge number,” said Alan Reay, Atlas Hospitality Group president.
Reay said while there have been higher per key prices for partial ownership purchases (such as $1 million for the Hotel del Coronado), he can’t remember a higher per-key price for the entire interest in a property in California.
“Looking at it that way this is definitely a record number,” Reay said. “This is a resounding plus sign for San Diego.”
Robert Rauch, a hotel consultant and developer, who acted as a receiver on the property in the 1990s, said there aren’t too many prospective buyers other than other large hotel REITs and some major Asian investors, who would have had the wherewithal to pay the $76.9 million for the property.
Reay said while the sales price is undeniably high, there just aren’t many properties like L’Auberge — set on 4.5 acres overlooking the Pacific Ocean — that come up for sale anywhere in the state.
The 120-room L’Auberge Del Mar has been sold to a unit of Bethesda-based LaSalle Hotel Properties for a reported $76.9 million, or $640,833 per room. Photo by CoStar Group
“There are huge barriers to entry,” Reay said. "You just aren’t going to see another hotel built in Del Mar.”
The L’Auberge Del Mar resort, at 1540 Camino Del Mar, was constructed by James Watkins of Winners Circle Resorts fame in 1989. Watkins owned the property into the next decade but was never able to recoup the millions that were sunk into the development.
Rauch said it is hardly surprising that L’Auberge was distressed at the time.
“Don’t forget that the early to mid-1990s were extremely difficult for our industry,” Rauch said.
After the property went through receivership in the mid- to late 1990s, Destination Hotels & Resorts, which manages the 462-room Paradise Point Resort on Mission Bay (which LaSalle owns), acquired L’Auberge for a sum that wasn’t immediately available.
In 2009, Destination Hotels embarked on a $25.8 million renovation of the property that included a full guestroom renovation, lobby upgrade and improvements of the meeting space, swimming pools, and food and beverage outlets.
The hotel’s 120 guestrooms have an average size of 320 square feet, including eight suites which average 500 square feet.
Along with its restaurants, bars and terraces, L’Auberge Del Mar features 16,500 square feet of flexible meeting and function space including six indoor meeting rooms and six outdoor areas. The resort also offers the 5,000-square-foot Spa L’Auberge and a fitness center in addition to two tennis courts, an outdoor recreational pool and a separate lap pool.
“We are extremely excited to acquire L’Auberge Del Mar,” said Michael D. Barnello, LaSalle president and CEO in a statement. “The property is in excellent condition and is extremely well located in a strong market which benefits from numerous demand generators.”
LaSalle Hotel Properties (NYSE: LHO) is a leading multi-operator REIT The company owns interests in 41 hotels of which 39 are owned 100 percent. The 39 wholly-owned properties are upscale full-service hotels, totaling more than 10,300 guest rooms in 13 markets in nine states and the District of Columbia.
LaSalle is far from being a stranger to San Diego. Along with Paradise Point, the REIT owns such properties as the 357-room Hilton San Diego Resort on Mission Bay, and the 283-room Hilton Gaslamp Quarter.
LaSalle’s stock price ended at $24.56 — up 38 cents up 1.57 percent on the day Friday. The stock has ranged from $21.80 to $30.46 during the past 52 weeks.