LAGUNA NIGUEL, CA-The Chicago-based Strategic Hotels & Resorts REIT has agreed to buy the 393-room Ritz-Carlton hotel and resort for $330 million in what is believed to be the highest price per room ever paid for a hotel in California. Strategic, in a separate deal, has also agreed to sell its Marriott Rancho Las Palmas Resort & Spa in Rancho Mirage for $56 million.

The sale of the beachfront Ritz-Carlton on the South Orange County Coast is expected to close in July. Alan Reay, president of Atlas Hospitality Group, tells that the price per room is the highest ever recorded in the more than 10 years that his Irvine-based firm has been tracking California hotel sales.

Reay tells that the price reflects not only the luxury resort quality of the hotel but the “irreplaceable location” of the property, which sits on a bluff overlooking the Pacific Ocean. “Even if you had the land available today, it would take you years and years to get it approved by the Coastal Commission, if you could get it approved,” Reay says.

The Ritz-Carlton sale is just one of many in California in which hotels are commanding top prices, Reay notes. “People ask me why are so many of these deals selling, and why are they selling at such low cap rates,” he says.

For hotels in general, Reay says, prices are rising for a number of reasons, including continued low interest rates. In the case of the Ritz-Carlton, the location and the fact that it’s the only Ritz-Carlton in Orange County are also significant factors.

Strategic is buying the Ritz-Carlton from Strategic Hotel Capital LLC for the purchase price of $330 million plus assumed debt of approximately $8.5 million. The resort, which occupies 18 acres, recently underwent a $40 million repositioning including the renovation of all guest rooms and lobby areas, a new ocean view restaurant, and the development of a 6,500-sf spa and a 2,500 sf fitness center.

Chicago-based Strategic’s deal to sell the Marriott Rancho Las Palmas Resort & Spa is with KSL RLP Holdings LLC, an affiliate of KSL Capital Partners LLC. The sale of the 444-room property is also anticipated to close in July.

KSL Capital Partners says it will invest “significant capital” to renovate and expand the hotel, upgrading such facilities and amenities as the resort’s guest rooms and suites, the entry way and lobby, all restaurants, the 27-hole golf course at Rancho Las Palmas Country Club and other amenities. The renovations are expected to take 24 months, during which the resort will remain open.

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