Sunstone Hotel Investors is making good on its prediction that it will be a net acquirer of hotels with better growth opportunities this year rather than a net seller.
The California-based real estate investment trust entered into a definitive agreement with an affiliate of Hyatt Hotels Corp. to purchase the fee-simple interest in the 630-room Hyatt Regency San Antonio Riverwalk for a gross purchase price of $230 million.
The funds to acquire the hotel will come from a portion of the cash earned on Sunstone's $370 million sale of the Boston Park Plaza in late 2023, according to a news release announcing the deal.
Sunstone executives noted previously that the Boston Park Plaza needed significant investment.
A $37 million renovation of the Hyatt Regency San Antonio Riverwalk was recently completed. The acquisition also includes nearly two acres of riverfront land and a 516-space parking garage that is next to the under-construction Alamo Visitor Center and Museum.
Hyatt will continue to manage the hotel under the Hyatt Regency brand while contributing about $8 million of key money as part of the transaction.
In Sunstone's fourth-quarter and full-year 2023 results, executives said the company would plan to be an acquirer in 2024 after a year of selling assets and investing in renovations to its owned hotels.
CEO Bryan Giglia said as the REIT was seeking to use a portion of its proceeds from the sale of the Boston Park Plaza to acquire a hotel, his team was specifically looking for a "group-centric hotel that has an attractive yield, has limited near-term, value-add opportunities."
"The acquisition of Hyatt Regency San Antonio Riverwalk allows us to redeploy capital at a higher long-term return and is a great example of the value we can create through our investment life-cycle approach. The addition of this hotel, combined with our two recently launched brand conversions and the completion of our transformative investment later this year at Andaz Miami Beach, will position Sunstone for significant earnings growth as we move into 2025. We also retain additional liquidity and balance sheet capacity that we can use to thoughtfully grow our portfolio and drive incremental earnings, superior returns, and greater per-share NAV growth," Giglia said in the news release.
The deal is expected to close at the end of this month.
According to CoStar, HNN’s parent company, the hotel was built in 1981 and last sold for an undisclosed price to H E San Antonio I LLC, the Hyatt affiliate, in June 2007.