News for the Hospitality Executive
|By Gregory J. Wilcox, Daily News, Los Angeles
Knight Ridder/Tribune Business News
Dec. 3, 2003 -- Entertainer and real estate investor Merv Griffin may have finally found a buyer for his flagship Beverly Hilton Hotel, home of the annual Golden Globes award show, sources said Tuesday.
Griffin apparently has stuck a deal with an investor group led by Ted Kahan, the former head of real estate for billionaire Marvin Davis, according to Orest Mandzy, managing editor of Philadelphia-based Commercial Real Estate Direct.
The purchase price is expected to be about $130 million, he said, roughly $220,000 per room.
"That's a big number," Mandzy said. "Hotels (ranked) just below this are selling for $150,000 to $200,000 a room."
Kahan's group has been trying to arrange financing, and one source familiar with the talks said that a deal could be announced next week. Neither Griffin nor Kahan could be reached for comment on Tuesday.
Griffin's entertainment endeavors have included creating the popular game shows "Jeopardy" and "Wheel of Fortune." He sold those in 1986 and turned his attention real estate.
His 580-room Beverly Hilton, at the southwest corner of Wilshire and Santa Monica boulevards, is managed by Beverly Hills-based Hilton Hotels Corp.
"We have no comment -- we can't say anything," said company spokeswoman Kathy Shepard.
It's the second time this year that Griffin has been close to selling what's considered one of Los Angeles' top hotels.
Early last July, Griffin announced he was negotiating with Beverly Hills-based Probity International Corp. About two weeks later both parties announced that talks had collapsed. Probity is the managing partner of the Peninsula Beverly Hills Hotel.
Prior to the deal falling through, Robert Zarnegin, Probity chief executive officer, said the hotel was an exceptional asset and prime candidate for renovation and repositioning in the market.
That perception has not changed since then.
"It's definitely a premiere hotel in the Los Angeles area," said Alan Reay, president of Atlas Hospitality Group, a consulting firm in Costa Mesa. "Most people, in my opinion, would look to upgrade the hotel."
Jack Kyser, chief economist for the Los Angeles County Economic Development Corp., said that the property is in a good location and has a good business base.
In addition to the Golden Globes, sponsored by the Hollywood Foreign Press Association, the hotel also hosts the Oscar Nominees Luncheon, the ASCAP Pop Music Awards and the ASCAP Film and TV Music Awards.
The hotel has been a Beverly Hills landmark since 1955. "A lot of people have said the property needed a lot of upgrading to make it competitive," Kyser said.
Reay said that there was lots of interest in the Beverly Hilton, even though the first deal did not materialize.
Griffin's decision to sell is not surprising. Reay said he has been slowly selling off his holdings, most recently the Merv Griffin Givenchy Hotel and Spa, a 100-room deluxe boutique hotel in Palm Springs.
Griffin also owns the Hilton Scottsdale Resort and Villas and the St. Clerans Manor House in Galway, Ireland.
If a sale of the Beverly Hilton is completed, this would be banner year for this market. Other big deals include the sale of the Hyatt in downtown Los Angeles and the Sheraton Gateway at Los Angeles International Airport.
"We've never seen this many large hotel transactions in a 12- to 18-month span," Reay said.
It's happening because of market conditions and low interest rates.
Tourism cratered after terrorists attacked New York City and Washington, D.C., in September 2001, and by the end of the year no investors were touching hotels, said Mandzy.
Now it seems that the market has bottomed out and opportunistic investors are jumping in.
"All of a sudden, there is a lot of capital and the higher end the hotel the better because when the going is good they preform really well," he said.
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