The Hotel Oceana on Santa Barbara’s waterfront has been purchased by a Philadelphia investment firm for $41.7 million.
Hersha Hospitality Trust, a publicly traded real estate investment trust, said it purchased the property at 202 W. Cabrillo Blvd. as part of a strategy to get into one of the “highest-demand gateway markets in the United States.”
The acquisition included the assumption of $24.9 million in mortgage debt.
The 122-room Hotel Oceana sits in Santa Barbara’s main tourist corridor at the gateway to Stearns Wharf. “The hotel is located on two oceanfront acres and within walking distance of downtown,” Hersha CEO Jay Shah said in a fourth-quarter earnings call with investors last month. “The purchase of the hotel exemplifies the investment characteristics that we target in an acquisition: A high-quality, independently managed hotel driven by significant transient demand and high-barrier-to-entry market for new hotel development.”
Hotel Oceana reported 92 percent occupancy in 2013, the firm said, with an average daily rate of $214.34. The nightly revenue per available room, or RevPAR, for the property last year was $196.61, the firm said.
“These operating statistics are in line with those exhibited by our Manhattan hotels and we are confident that with some strong asset management fine-tuning we will be able to drive performance even higher at the hotel,” Shah said in the earnings call. “We are excited to be entering the Santa Barbara market with the acquisition of this quality asset, as Santa Barbara is one of the highest RevPAR leisure markets in the United States.”
Hersha sold about $400 million worth of assets in 2012 and 2013, he said, while buying about $525 million worth of new properties. The company owns 51 upscale hotels around the country, including on the West Coast and in New York, Boston, Philadelphia, Miama and Washington, D.C.
The acquisition comes after several high-profile hotels on the South Coast have changed hands over the last two years. The 171-room Hyatt Santa Barbara, also located on the waterfront on Cabrillo Boulevard, sold last year for $61 million to Chesapeake Lodging Trust, a Maryland-based hotel investment firm.
In February 2013, Irvine-based Pacific Hospitality Group purchased the 360-room Bacara Resort & Spa in Goleta for an estimated $180 million from Ohana Group, which had purchased the property in 2011 for an estimated $104 million.
San Francisco-based boutique operator Kimpton Hotels & Restaurants purchased the downtown Canary Hotel for an estimated $40 million in 2012, setting a new per-room record for the area.