Dive Brief:
- Sunstone Hotel Investors has agreed to sell the Hyatt Regency San Francisco to “funds affiliated with Blackstone Real Estate” for $279 million, or about $340,000 per key, according to a Tuesday news release.
- The sale of the 821-room hotel is expected to close in late July or early August, with more details to come when California-based Sunstone releases its second-quarter earnings report.
- Sunstone CEO Bryan Giglia said in a statement that the sale aligned with the real estate investment trust’s larger strategy to “capitalize on higher private market values and recycle the proceeds into more accretive options on a risk-adjusted basis.” The deal also comes amid hotel players eyeing more deals in the San Francisco hospitality market in part to capitalize on the area’s artifical intelligence boom.
Dive Insight:
The company plans to use $70 million of sales proceeds to repurchase company stock. Giglia said the leftover liquidity from the transaction and stock buyback “increases our flexibility and facilitates our ability to reinvest in a manner that will provide our investors with superior returns.”
The REIT is also looking at “additional opportunities” to deploy the remaining proceeds from the sale in a way that will “provide shareholders with the best risk-adjusted return,” per the release. Giglia said Sunstone is committed to pursuing any alternatives that would result in value creation for shareholders.
Eastdil Secured marketed the hotel and served as the deal’s broker, while JP Morgan Securities LLC plans to stay on as Sunstone’s financial adviser.
The sale of the San Francisco Hyatt comes after Sunstone sold the 252-room Hilton New Orleans St. Charles for $47 million last June. At the time of the deal, the firm said it would use sale proceeds to buy back company stock as part of its ongoing stock repurchase strategy, which has continued in 2026.
During Q1, Sunstone bought back 3.18 million shares of its common stock for a total repurchase amount of $29.1 million, per the report — up from the same time in 2025, when it repurchased 821,771 shares of its common stock.
The transaction comes as the San Francisco hospitality market is poised for a rebound, despite being the slowest to recover following the COVID-19 pandemic. Other hotel players eyeing the Northern California market this year include Denver-based Peregrine Hospitality, which expanded its presence in the region with the acquisition of two hotels; and New York City-based Blackstone, which bought the Stanly Ranch resort in Napa Valley, driven in part by the Bay Area’s ongoing AI boom.
Also toward the end of last year, Blackstone acquired the luxury 277-key Four Seasons Hotel San Francisco amid AI growth.
