SAN JOSE — Three Silicon Valley hotels have landed new ownership deals that suggest investors hunger for lodging properties in the tech-laden region despite coronavirus-linked uncertainties.
Two hotels in north San Jose have just undergone an ownership buyout while a hotel in Campbell has been bought by an East Bay investment group, documents on file in Santa Clara County show.
The combined value of the three hotel transactions, according to county records, was $117.3 million.
The hotels involved in the transactions were:
— Hyatt Place San Jose Airport, a 190-room hotel at 82 Karina Ct. in San Jose.
— Hyatt House San Jose Airport, a 165-room hotel at 2105 N. First St. in San Jose.
— TownePlace Suites by Marriott, a 95-room hotel at 700 E. Campbell Ave. in Campbell.
These deals are taking place in what’s described as a “strange” hotel market in the Bay Area generally, including in Santa Clara County, according to Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California lodging market.
“The performance of hotels in Silicon Valley and the Bay Area remains relatively weak,” Reay said. “But buyer interest and demand for quality hotel assets is as high as I’ve ever seen.”
With the north San Jose hotels, Veeraganti Ranganath, who has an office in Santa Clara, was the principal buyer and the principal seller in separate transactions for the two properties, a review of county public records shows.
“It looks like he is buying out a partner,” Reay said.
Several transactions have occurred in recent years that involve the north San Jose Hyatt hotel properties, Santa Clara County documents show.
In 2015, a Ranganath-led group operating as San Jose Hotel Partners bought the land for the two hotels, which are on different but adjacent parcels, from Hyatt Hotels for $12.3 million.
In 2016, the group headed by Ranganath obtained a $70.7 million construction loan from PNC Financial Services to develop the two San Jose hotels.
At the same time as that financing occurred, Ranganath brought on board a joint venture partner, Orange County-based Newport Real Estate Services.
The Hyatt Place transaction was valued at $47.7 million while the Hyatt House deal has a $41.4 million value, for a total deal value of $89.1 million, the county records show. But these values understate the actual price that a sale of either or both hotels might command if a partnership buyout and rearrangement wasn’t involved.
The Campbell hotel deal was considerably more straightforward.
TownePlace Suites by Marriott in Campbell was bought on Nov. 9 for $28.2 million by a group headed by Walnut Creek-based Lotus Hotels, whose principal executive is Bhupen Amin, county documents and state business records show. Lotus Hotels is a family-operated lodging company.
The Lotus Hotels affiliate obtained $24.1 million in financing from United Business Bank at the time of the purchase, according to public records.
The deals show that investors are willing to risk the considerable uncertainties that still haunt the hotel sector as a result of the coronavirus outbreak.
“Demand is very high for Bay Area hotels,” Reay said. “We are really in a strange market.”
