"W Hotel sold to Hong Kong company | AboutHK.Com - more information about HK"
|  James Temple
Starwood Hotels & Resorts Worldwide Inc. has agreed to sell the W Hotel in San Francisco to a Hong Kong investment company for $90 million, representing a more than 50 percent drop from peak hospitality property values set two years ago.
The publicly traded company based in White Plains, N.Y., said in a statement it pursued the sale to reduce its debt. Keck Seng Investments Ltd. is expected to close on the deal at the end of the month.
Starwood, which opened the upscale, 423-room hotel at the crest of the dot-com boom in 1999, will continue to operate it as a W Hotel under a long-term management agreement. General Manager Michael Pace couldn't immediately be reached for comment.
The high-water mark for San Francisco hotel sales was set around April 2007, when Taj Hotels Resorts and Palaces based in Mumbai, India, bought Campton Place from Kor Hotel Group of Los Angeles for about $58 million. That amounted to more than $500,000 per room, nearly 60 percent more than the W's "per-key" price of less than $213,000.
The price reflects continuing weakness in the hospitality sector and tightness in the credit markets, said Mark McDermott, senior managing director of San Francisco hotel advisory firm PKF Capital. Hotel occupancy levels in the region fell 12.6 percent from last year and room rates declined 11.7 percent, the company reported.
Few hotel properties have been sold in the past few years, but the market has begun to loosen in recent months. Notably, San Francisco investment fund Geolo Capital bought the Carmel Valley Ranch resort from Blackstone Group for $20 million last week.
"We've finally basically bridged the buyer-seller gap, with sellers' expectations falling to levels where buyers are confident enough" to pursue deals, McDermott said. "We would expect this type of activity to represent, hopefully, the start of folks dipping their toes back into the water."
Jones Lang LaSalle Hotels represented Starwood, which listed the W hotel for sale late last year.
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