By Kathy Day
A second significant La Jolla property hit the market on Wednesday — the Estancia La Jolla Hotel & Spa, which sits on university-owned land across from the UCSD campus.
Jones Lang LaSalle Hotels announced it would market the property “unencumbered of both brand and management” on behalf of an affiliate of Lowe Enterprises (Lowe). The listing price was not immediately available.
The Los Angeles-based real estate firm’s Destination Hotels & Resorts has operated the hotel on a long-term ground lease with UCSD since it opened in 2004. Developed by Lowe, it includes 210 rooms, three restaurants and lounges, the 8,000-square-foot Spa at Estancia, and more than 21,000 square feet of meeting space.
Estancia joins the Top of the Cove restaurant (
read the story here
) in seeking a buyer. Mike Slattery of Cassidy Turley BRE Commercial has the $7.5 million listing for the Prospect Street property.
It is also the second La Jolla hotel to go on the market in the past year, although the first — the La Valencia — was a result of the owner’s health and not so much a factor of the market, said Bob Rauch, a hospitality and management consultant well versed in the San Diego marketplace who also is a hotel owner and operator.
Interviewed on Wednesday, he said he was “not surprised that (Estancia) is for sale, only that it is being listed with a broker.” Generally, he said, hotel operators will keep word that a hotel is for sale quiet because “it is hard on the employees.”
He noted there is currently “a lot of interest among real estate investment trusts (REITs) who feel like it is a good time to get a hotel.”
In recent months, investors have purchased the Manchester Grand Hyatt, the Hilton Bayfront and the downtown Se Hotel, he said.
Lowe Enterprises, he added, is a “sophisticated owner/operator with great knowledge of the market. … I’m sure this is not a fire sale, but a strategic sale.”
Its Destination Hotels group has a portfolio of luxury and upscale properties, many of them on the coast or in other resort destinations, including the L’Auberge Del Mar and Paradise Point Resort & Spa in San Diego as well as in ski resort areas, desert and golf resorts, and major cities like New York and Washington, D.C.
Estancia has been recognized as a AAA Four-Diamond hotel and was on the Conde Nast Traveler “Hot List” of best new hotels in the world in 2005-2006.
In a press release announcing that Jones Lang LaSalle Hotels will be handling the sale, John Strauss, a managing director with the firm, said, “Estancia La Jolla offers a new owner the opportunity to acquire one of the newest coastal California resorts in an excellent, high barrier-to-entry location. The unencumbered nature of the offering will afford a new owner a great deal of flexibility in determining its operating plan for the property.”
Rauch said he believes buyers and sellers are seeing a positive change in the market, a factor also noted in the press release from Jones Lang LaSalle.
Although Rauch said local hotel occupancies “hit bottom” in the first half of 2010, the second half of last year showed improvement and every month this year has been better.
“We’ll have a good run in the next five years,” he said, noting that the forecasts are encouraging sellers to “cash out” and buyers to step up to the plate.