MONTEREY, CA-A group of Monterey investors has purchased three Peninsula hotel properties. The hotels are part of a six-property hotel portfolio, and were sold on behalf of affiliates of USB Warburg, LLC.

Jones Lang LaSalle Hotels, who dealt directly with the Cannery Row Company, arranged the sale. The Cannery Row Company headed the group of investors in the transaction.

The Cannery Row Company holds more than 80% ownership in the sale, with additional investors owning the remaining percentage. The investors include Ted Balestreri, Bert Cutino, George Zarounian and Harry Davidian.

The hotel package consisted of the Spindthrift Inn, Monterey Bay Inn and Victorian Inn. Two of the hotels are oceanfront properties on Cannery Row, while the third is located less than 2 blocks away. With this purchase, the hotel portfolio is left with only one remaining property, the Hotel Pacific in Monterey, for sale.

“The Cannery Row Company owns most of the land around Cannery Row including the land under several other existing Monterey hotel,” says John Strauss, Vice President of Jones Lang LaSalle Hotels. “This presented a terrific opportunity to expand their existing local real estate portfolio.”

“This portfolio was probably some of the most sought-after hotel real estate in California during the first half of 2001,”adds Strauss. “A myriad of investors in presented more than 15 offers, with the top bidders being either high-net-worth individuals or regional owner-operators with operating synergies from other hotels.”

This investor interest was generated by the stability of the market from both supply and demand perspectives, says Arthur Buser of Jones Lang LaSalle.

“There are high barriers to entry for new hotel development in Monterey given the current hotel building moratorium, so it is unlikely that competitive hotel supply will enter the market any time soon,” says Buser.

Buser adds that the area is a major tourist attraction, so the hotels will stay in demand.

Monterey’s Cannery Row is a well-known area for shopping and dining, and was made famous by author John Steinbeck’s novella, “Cannery Row,” who told of a time when the street was filled with whalers, fishermen and cannery owners.

The sales price was not disclosed, but an outside source reported that it went for nearly $40 million. A LaSalle representative confirmed that this price was fairly accurate. The hotels went on the market in January of this year.

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