A Los Angeles hospitality investor has completed a deal to buy a posh downtown club in a bet that people are coming back to gyms and hotels as the pandemic's impact on the economy lessens.
Stockdale Capital Partners spent an undisclosed amount to purchase the 140-plus-year-old Los Angeles Athletic Club at 431 W. Seventh St. from Philadelphia-based self-storage real estate investment trust CubeSmart. The property became part of the CubeSmart portfolio when it acquired LAACO — a holding company that owned a number of self-storage facilities, the club and the California Yacht Club — in a $1.7 billion deal in late 2021.
LAACO, controlled by members of the Hathaway family, had owned the athletic and yacht club for at least four generations, according to a statement. The clubs, not part of CubeSmart's core business, were marketed before the LAACO deal closed, but no deal was reached. CoStar News first reported in November that Stockdale was interested in buying the Los Angeles Athletic Club.
The fate of the California Yacht Club is undetermined. Representatives of the club and CubeSmart didn't respond to requests for comment.
The purchase of the downtown club is the latest deal for Stockdale, which owns the former hClub Hotel in Hollywood, the Le Merigot hotel in Santa Monica and other U.S. properties. Bill Doak, Stockdale's managing director of hospitality, told CoStar News that the firm liked that the 12-story, 186,000-square-foot Los Angeles Athletic Club offered multiple revenue streams, including the hotel, event space, commercial space and a gym. Stockdale wants to beef up the club's membership, currently sitting at around 3,300 people, to its historic highs of more than 5,000 members, and Doak said he expects that downtown's population growth will help.
Downtown Los Angeles has more than 5,000 apartment units under construction, according to CoStar data. There are roughly 35,000 apartments already in downtown L.A., and the market has added 16,000 units over the past decade.
"We saw a club like this having direct correlation to residential life downtown," Doak said.
In addition, Doak said Stockdale wants to continue renovating the club's 72 hotel rooms. Roughly $30 million has been spent on improving the property since 2015.
Hotel occupancy rates have been rising in Los Angeles, and sit at roughly 65%, up from 47% one year ago, according to CoStar data. Revenue per available room, or RevPAR, which measures hotel performance, has soared to $107.37, up from $60.82 one year ago.
Stockdale also plans to reopen the former hClub Hotel in Hollywood at 1717 Vine St. as The Astor in June, Doak said. The hotel was shuttered in April 2021, and Stockdale bought the 35-room property for $57 million that same month, according to CoStar data. Stockale plans to improve the hotel's experience and open it to outside guests, which was not something the members-only hClub typically did.
"We've had stops and starts in L.A.," Doak said of the performance of hospitality properties in Los Angeles, where COVID-19 variants have blunted demand multiple times in the past year. "But we've started seeing that trend back toward the positive."