Hotel Acquisitions Boast Recent Capital Infusions and Stable Operating Performance

TIBURON, CA—Procaccianti Companies recently acquired two well-known Northern California hotels, The Lodge at Tiburon and Toll House Hotel located in Los Gatos. The sales price is estimated in the $43 million range, GlobeSt.com learns.

Together, the hotels comprise 228 guest rooms and suites, approximately 6,500 square feet of meeting space, and multiple food and beverage offerings. James Procaccianti, president and chief executive officer of Procaccianti Companies, says the hotels are irreplaceable assets with well-known reputations for service and quality.

“This acquisition presented an extremely unique opportunity to acquire a collection of well-positioned assets in high-barrier-to-entry markets that are supported by their superior locations, recent capital investments, stable operating performance and a strong mix of high caliber demand drivers,” says Procaccianti. “Both hotels are in highly desirable Bay Area locations and serve as the gateway to Northern California’s Napa Valley and wine country. The Lodge at Tiburon and Toll House Hotel are strong additions to our expanding national portfolio of high-quality boutique properties, and we feel privileged to be the new custodians of these tremendous assets.”

Built in 1977 and renovated in 2013, The Lodge at Tiburon offers 103 guest rooms including two spacious suites in a location overlooking the Bay. Located in the affluent hamlet of Tiburon, The Lodge at Tiburon features signature dining at the Tiburon Tavern, 3,765 square feet of indoor meeting space, an outdoor pool, hot tub and an open-air SkyDeck lounge. The Lodge at Tiburon is a leisure destination popular with visitors from San Francisco, and serves as a corporate retreat location and wedding venue.

Built in 1983 and renovated in 2012, the 115-room Toll House Hotel offers a scenic location in historic Los Gatos. The hotel features eight spacious suites, more than 6,100 square feet of indoor and outdoor meeting and event space, the VERGE Restaurant & Lounge, and amenities including a business center. A destination that caters to both corporate and group demand, Toll House Hotel is located at the base of the Santa Cruz Mountains, a gateway city to Silicon Valley. Los Gatos offers a diverse local economy with close ties to innovation and high technology, including 3,000 businesses comprised of start-ups and nationally recognized brands. Los Gatos is the headquarters location for numerous industry-leading corporations, including Netflix, as well as Roku, Cryptic Studios, Buongiorno USA, Digital Media Academy, ImageShack and Smashwords.

“Procaccianti Companies’ real estate platform encompasses investments across the risk spectrum from core and core plus to opportunistic and value-add,” Procaccianti conveys. “Whether through structured real estate investment vehicles, debt platform, joint ventures, one-off acquisitions or ground-up developments, our proven approach is characterized by a history of generating above-market risk adjusted returns.”

The performance of boutique and lifestyle hotels is expected to experience a slowdown in 2019. On average, the annual RevPAR change for properties in this segment is forecast to drop from 2.5% in 2018 to 0.9% in 2019, a decline of 160 basis points, according to a report by CBRE. By comparison, CBRE’s RevPAR forecast for all US hotels is projected to decrease by 90 basis points. The pace of RevPAR growth is forecast to decline in six of the seven sub-segments.

While the pace of RevPAR growth is decelerating, five of the seven segments will enjoy increases in RevPAR during 2019. The greatest gains are anticipated in the legacy brands or lower-priced category (3.0). Unfortunately for hotels in the boutique/lifestyle or lower-priced sub-segment, the RevPAR is expected to decline by 3.2%, says CBRE.