Blackstone Group agreed to buy a majority stake in Strategic Hotels & Resorts Inc.'s Hotel del Coronado to help restructure the debt on the Southern California resort that was the backdrop of the film "Some Like it Hot."
Strategic Hotels formed a joint venture with Blackstone Real Estate Advisors and KSL Resorts, an affiliate of Kohlberg Kravis Roberts & Co., investing an undisclosed amount of cash into the luxury hotel and converting a portion of the existing debt into equity, Chicago-based Strategic said in a statement today. Deutsche Bank AG provided $425 million in debt financing.
The 670-room Hotel del Coronado, located on 28 acres of oceanfront property near San Diego, has hosted 11 U.S. presidents and celebrities including Marilyn Monroe, Madonna and Brad Pitt, according to its website. The transaction values the hotel at about $590 million, Strategic Hotels said. That is less than the $745 million the company bought it for in 2005, said Alan Reay, president at Irvine, California-based Atlas Hospitality Group.
"The San Diego market has started to rebound, and more importantly, the luxury hotel sector has rebounded very strongly," Reay said in a telephone interview. "For Blackstone this is an excellent investment. The Coronado is an irreplaceable asset. It's world famous. They are getting in at a much lower price than what Strategic purchased it at."