Hilton Worldwide, the largest operator of lodging properties, agreed to buy San Francisco’s Parc 55 hotel and four other hotels for $1.76 billion.
Hilton will make the acquisition with some of the proceeds from its $1.95 billion sale of the Waldorf Astoria hotel in New York, according to a statement. That deal, with China’s Anbang Insurance Group, has now closed.
Hilton said in October it agreed to sell the Waldorf Astoria on Park Avenue to Anbang. Under U.S. tax-deferral rules, Hilton must complete its purchases with the proceeds within 180 days of the sale closing. Anbang said on 1 February that it had completed all regulatory procedures for its acquisition.
The other four hotels are in Florida, with two in Orlando and two in Key West. All of the Florida properties already operate under the Hilton Brand and have a total of 1,960 rooms, according to the statement.
The Parc 55, San Francisco’s fourth-largest hotel, accounts for more than a third of the acquisition by rooms and will be a new addition to the Hilton Hotels & Resorts brand.
Hotel occupancies in the area encompassing San Francisco and San Mateo averaged 84.1 per cent last year, compared with 64.4 per cent for the US, according to STR. The area’s hotels charged daily rates of $207.81, an increase of 11 per cent from 2013 and almost double the US average, according to the Hendersonville, Tennessee-based research firm.
Hotel values have recovered to within 15 per cent of their 2007 peak. Prices for properties in big cities climbed 15 per cent during the past year, double the gain in smaller cities, according to indexes compiled by Moody’s Investors Service and Real Capital Analytics Inc.
Hilton’s acquisition is slated to close this month and the approximately $100 million that’s left of the proceeds from the Waldorf sale will be used to buy additional properties within the next six months, according to the statement.
