The Southern California Hotel Investment Summit

The Southern California Hotel Investment Summit

Thursday, December 13, 2012
SLS Hotel – Beverly Hills

CLICK HERE FOR MORE INFORMATION!

AGENDA
7:30-8:30 AM: Coffee & Networking
8:30-9:15 AM: Special Keynote: Sam Nazarian
9:15-10 AM: Panel: How Deals are Getting Done
10-10:45 AM: Panel: Development and 2013 Outlook
10:45-11:30 AM: Post-Game Networking

Keynote by entrepreneur, visionary, & developer Sam Nazarian Founder, CEO and Chairman sbe

Maki Bara President & Co-Founder The Chartres Lodging Group

Bob Sonnenblick Chairman Sonnenblick Development LLC

Warren de Haan Chief Originations Officer Starwood Property Trust

Chris Dobbins VP of Development Hyatt

Vernon Chi SVP, Hospitality Finance Group Wells Fargo

Dan Lesser CEO LW Hospitality

KEYNOTE MODERATOR

Tom Naughton Chief Investment Officer Clearview Hotel Capital

Alison Cumberland VP Marriott International

Michael Scheinberg Partner Pircher, Nichols & Meeks

MODERATOR

Rich Brand Partner Arent Fox

Biznow Honcho Hoedown

HONCHO HOEDOWN

Sonnenblick Development prez Bob Sonnenblick and STR Global’s Jan Freitag insisted our reporter Amanda Metcalf to get in a pic. Check out the blue and orange color coordination this trio’s got going. Bob tells us there’s never been a better time to buy land for resorts, adding that feasibility experts say new construction has been at minimal levels for three full years.

[Click for full article]

LA Construction & Development Part 2

Los Angeles Construction & Development Summit

source: http://www.bisnow.com

Julie@bisnow.com

Developers have a lot on their minds these days, and we’re not talking about who’s going to win this season of So You Think You Can Dance. Our second panel at Bisnow’s LA Construction & Development Summit this week gave us an earful.

In the last go-round, Sonnenblick Development’s Bob Sonnenblick built 1M SF of office space in the LA area. This go-round, he’s in the hotel development business and noted that the prebooking for six months out is up a good 7% to 8%. Bob said he’s been involved in four arranged marriages in LA, but not to worry—he meant that on four projects he’s had the architect working for him on a base design, then switched to a pure design-build contract where he has a guaranteed maximum price with the general contractor, and the architect is working for the GC.


Bob noted that in all of his design-build contracts, he throws 100% of the risk onto the shoulders of his general contractors; there’s surely bonding, as well. “I can go to sleep for two years and that thing still gets developed the way I want it to.” (Though there are other reasons why he shouldn’t sleep for two years: Chief among them, who wins the Super Bowl.) Among the barriers, he cited entitlement process issues such as traffic and neighborhood groups. For Kristina, the challenge is carpetbaggers with no vested interest in a neighborhood who come in and make claims. The huge specific plan USC is trying to entitle is a case in point: A group asked for $250M in exchange for non-opposition. (Support would cost extra.)

Dining with us in his work clothes at BOA Steakhouse in Santa Monica Wednesday evening, Bob Sonnenblick demonstrates why he left New York 30 years ago to come west. Well, in addition to the fact that the renowned company founded by his grandfather in 1910, which financed much of New York’s skyline made him head of West Coast operations where he helped finance much of downtown LA’s booming skyline in the ’80s. Nearly 25 years ago he went on to start Sonnenblick Development, which has not only developed numerous federal and commercial office buildings, but also resorts in places like Park City, Palm Springs, and Palm Beach, where he can also get fresh air and additional use of his colorful shirts.

Bisnow: Keeping the coffee hot, and the panel discussions too.

The Next Sand Castle?

Sonnenblick Development and Ritz-Carlton are actively looking at a specific block in Santa Monica to do a $150M high-rise hotel project, Bisnow learned yesterday. (It’ll be remembered fondly as the place Sonnenblick and Ritz made beautiful music together.)

Principal Bob Sonnenblick and his wife Pamela celebrated their 23rd anniversary this past weekend at the Hotel Bel-Air. He tells us the project is envisioned as a 200-room Ritz-Carlton hotel, along with about 120k SF of branded condos plus some ground-floor retail. Ever since Bob and his partners sold the Loews on Ocean Avenue a few years back, he’s been itching to get back into the Santa Monica hotel market.

The Loews Santa Monica Beach Hotel sold for a cool $125M. But that’s not all—Bob has been selected to build a pair of full-service and limited-service hotels totaling $100M at Sacramento International Airport. Slated to begin construction in mid-2013—the airport’s first new rooms in 30 years—the hotels will be attached to the airport’s new terminal.

Sonnenblick Development also has spent $100M to buy seven sites to build full-service resort hotels. Two of them are in Palm Beach, Fla., and the Bahamas. “We like the warm weather markets, and we really focus on oceanfront real estate.” Bob’s an active polo player as well as an avid skier—last month he was in Alta, Utah (above). But he’ll leave his skis at home on June 25, when Bob will be a panelist on our LA Construction & Development Summit at the Omni Hotel Los Angeles. [Register here]!

Developer sees dollar signs in plan to build two airport hotels

Company to study market demand, negotiate terms with airport officials

Despite lagging demand and an oversupply of rooms in the region, the developer proposing two hotels at Sacramento International Airport is eager to start work.

The Sacramento County Board of Supervisors voted 5-0 on Wednesday to negotiate an agreement with Sonnenblick Industries LLC. Three years after plans for an airport hotel were scrapped, the Pacific Palisade company has proposed privately financing a 132-room budget hotel and a 200-room full-service hotel at no cost to the county. One reason, said company chairman Bob Sonnenblick: The airport’s former 89-room hotel, which was leveled to make room for the new Terminal B, had the highest occupancy of any hotel in Sacramento County for 40 years.

“It was kind of an old, grade B-minus hotel,”
Sonnenblick said. “Imagine what a good quality hotel would do in an even better
location within the airport and with a new $1 billion terminal to feed into it… I’m very excited about this project.”
Bob Sonnenblick
chairman,
Sonnenblick Industries LLC

The success of on-airport hotels in Sacramento will depend upon the success of the airport itself, said Alan Reay, president and founder of Atlas Hospitality Group. “That’s the big gamble there,” he said. “It’s really going to depend on the forecast for traffic at Sacramento International.”

Sonnenblick funded an initial feasibility study that indicated the airport could support two hotels with more than 20,000 square feet of meeting space.

As part of the agreement with the county, Sonnenblick will now commission a study to provide more in-depth information on market demand. Airport staff also will begin negotiations with Sonnenblick to finalize other terms and conditions, such as rent. The board will consider a more fully negotiated agreement at a later date. Linda Cutler, deputy director of commercial strategy for the airport system, said it’s standard practice for airports the size of Sacramento International or larger to offer a hotel. Sacramento draws travelers from a wide geographic area, including Napa and the Central Valley, who may take flights that leave early or land late, she said. She said there’s real value in being able to offer travelers an on-site hotel as an alternative to having to find ground transportation to get to a hotel in nearby Natomas, for example.

In addition, she said, hotel amenities, from business centers to restaurants, would generate revenue for the airport.
Sonnenblick proposes a development team that would include Gold River-based Tricorp Hearn Construction Inc. and San Francisco-based RYS Architects. The company’s proposal estimates gross revenue of $19.2 million in the first year and $30.4 million by year 10, according to a county staff report.

The proposal comes as Sacramento’s hotel market — which added space at a furious rate before being hit hard by the Great Recession – struggles to recover. In February, year-to-date hotel occupancy in Sacramento was 53.3 percent, up from 52 percent for the same two-month period a year earlier, according to figures from Atlas. Occupancy rates in 2006 exceeded 70 percent.

Airport hotels at San Francisco and Los Angeles are doing fantastic, Reay said. But the smaller Ontario International Airport – which, like Sacramento, poured big money into an expansion – has seen passenger traffic drop dramatically and is facing possible closure.

But Reay said Sacramento may be very different from Ontario, and less likely to lose business since alternative air travel is more than an hour away.
“There is no substitute for Sacramento,” he said. “I don’t think Sacramento will suffer the same fate.”
The airport, meanwhile, is working to attract new carriers – and passengers.

Just this week, the Sacramento County Board of Supervisors approved an incentive package totaling $400,000 to try to attract low-fare airline Virgin America Inc. to the airport. Airport officials have been in talks with Burlingame-based Virgin America for several months about adding service between Sacramento and Los Angeles.

Two New Hotels Costing $100 Million Planned for Sacramento Airport

Sonnenblick Development LLC, which helped develop Loews Santa Monica Beach Hotel, will spend $100 million on two hotels at California’s Sacramento International Airport, the site’s first new lodging properties in 30 years.

The Los Angeles-based company won the contract to build the hotels, to be attached to the airport’s new Terminal B, according to Robert Sonnenblick, the company’s principal. Construction of a 225-room full-service hotel and a 150-room limited-service property will start in mid-2013, with an opening planned for the first quarter of 2015, he said.

Hotel development has been stagnant in California and across the U.S. because construction financing has been difficult to obtain, according to Sonnenblick. The Sacramento airport’s only hotel, a 150-room property from the mid-1970s, was demolished to make room for the new terminal, he said.

“An airport of this size can support several hotels but currently has none,” Sonnenblick said. “We see this as a specific opportunity that provides us with a monopoly in the foreseeable future.”

Sonnenblick’s company will begin interviewing potential hotel operators for the airport properties this month, he said. The contract to build the hotels is with Sacramento County, which is leasing the land to Sonnenblick Development.

The firm has spent $100 million over the past two years to buy seven parcels on the U.S. coasts, in locations it hasn’t disclosed, for luxury resorts.

To contact the reporter on this story: Nadja Brandt in Los Angeles at nbrandt@bloomberg.net

To contact the editor responsible for this story: Daniel Taub at dtaub@bloomberg.net

Sonnenblick’s Hotels project at Sacramento airport approved for takeoff

The Sacramento County Board of Supervisors voted 5-0 Wednesday to move ahead on a proposal for the private development of two hotels on airport property.

Sonnenblick Industries LLC has proposed financing the development of two hotels at Sacramento International Airport , three years after plans for an airport hotel were scrapped because of the flailing economy.

Airport staff will now begin negotiations with Pacific Palisades — which will design, develop and operate the hotels — to finalize other terms and conditions, such as rent. Sonnenblick also will commission a feasibility study.

The board is expected to consider a more fully negotiated agreement at a later date.

Sacramento International Airport opened a $1 billion terminal last fall, replacing a structure that is four decades old with a much larger terminal and concourse.

What had been a nearly $1.3 billion project shrank to $1 billion after airport executives shelved plans for a hotel and parking garage during the recession.

Sacramento International had a hotel on site before the new Terminal B was constructed. The 89-room Host Sacramento Airport Hotel closed in August 2008 and was leveled to make room for the new terminal.

Sonnenblick’s proposal was the only one submitted by the Jan. 30 deadline in response to a request for proposals issued Nov. 3.

Sonnenblick proposes a full-service 200-room hotel and a more limited service hotel with 132 rooms.

The company’s proposal estimates gross revenue of $19.2 million in the first year and $30.4 million by year 10.

Melanie Turner covers energy, environment, clean technology, agriculture, transportation, media and marketing for the Sacramento Business Journal.

Sonnenblick puts Sacramento airport hotels back on table

Sonnenblick Industries Inc. has proposed financing the development of two hotels at Sacramento International Airport, three years after plans for an airport hotel were scrapped because of the flailing economy.

The Sacramento County Board of Supervisors is set Wednesday to consider negotiating an agreement with the Pacific Palisades company for the design, development and operation of two hotels on airport grounds.

If the board agrees to move forward on such a project with Sonnenblick Industries, airport staff would begin negotiations with the company to finalize other terms and conditions, such as rent. The board would consider a more fully negotiated agreement at a later date.

Sacramento International Airport opened a $1 billion terminal last fall, replacing a structure that is four decades old with a much larger terminal and concourse. The Big Build was the largest public works project in Sacramento history.

What had been a nearly $1.3 billion project shrank to $1 billion after airport executives shelved plans for a hotel and parking garage.

Sacramento International had a hotel on site before the new Terminal B was constructed. The former Host Sacramento Airport Hotel closed in August 2008 and was leveled to make room for the new terminal.

Meanwhile, the Sacramento County Airport System has been researching the possibility of bringing back a hotel since early last year. The airport system hired Dallas-based Corgan Associates Inc. to identify potential hotel sites. Corgan identified a site between terminals A and B, and another between Terminal B and the airside concourse.

The county moved ahead Nov. 3, issuing a request for proposals. Sonnenblick’s proposal was the only one submitted by the Jan. 30 deadline.

Sonnenblick proposes two hotels, with 132 and 200 rooms. One hotel would feature a 20,400-square-foot conference and meeting space, business center, pool, full-service spa and fitness center.

Sonnenblick proposes a “strong development team” of three primary companies:

• Los Angeles-based real estate development firm Sonnenblick Development would be responsible for financing, marketing and public relations. The company is known for creating unique and innovative lease and financing structures, and for projects such as The Ritz Carlton Hotel in Pasadena and the Los Angeles World Trade Center.
• Gold River-based Tricorp Hearn Construction Inc. would be the general contractor. Local hotel projects have included Le Rivage Hotel on the Sacramento River, Hyatt Place Hotel at the University of California Davis and the Hampton Inn & Suites Hotel West Sacramento.
• San Francisco-based RYS Architects would provide architectural services. Local projects have included the Best Western in Rancho Cordova and Homewood Suites by Hilton in Natomas.

Sonnenblick has proposed financing both hotels. The company’s proposal estimates gross revenue of $19.2 million in the first year and $30.4 million by year 10, according to a county staff report.

Robert Sonnenblick has been chosen by Opal Financial Group to lead its Hotel Industry Panel at the upcoming “Real Estate Investors Summit”.

PRESS RELEASE:
For public distribution 4‐5‐2012
Los Angeles‐based real estate developer Robert Sonnenblick of Sonnenblick Development LLC has been chosen by Opal Financial Group to lead its Hotel Industry Panel at the upcoming “Real Estate Investors Summit”. The deal‐making conference will be located at The Perry Hotel on South Beach (Miami), Florida on April 27th at 10am.

Also joining Mr. Sonnenblick on the panel will be Mr. Ben Cary, Director of Development at Starwood Hotels, and Mr. Chris Cargen, President of Hospitality America, Inc.

For more information, please see www.Opalgroup.net and www.SonnDev.com

4 TRENDS SHAPING NYC HOSPITALITY

4 TRENDS SHAPING NYC HOSPITALITY

http://www.bisnow.com/new-york-real-estate/2012/03/27/4-trends-shaping-nyc-hospitality

Our 275 attendees walked into Bisnow’s NY Hotel Investment Summit last Thursday at the Marriott Marquis to Creedence Clearwater Revival’s “Have You Ever Seen the Rain?” But they won’t find dark clouds in the sector. “We’ve bottomed out and the next six to nine months will definitely be an upside,” said Sonnenblick Development chairman Bob Sonnenblick, who joined us all the way from Pacific Palisades, Calif. (It’s amazing how willing people are to travel when they’ve got good news to share.)

1) LUXURY AND BOUTIQUE DEVELOPMENT

It’s a unique period for NYC hospitality, says Tribeca Associates partner Mark Gordon—we’re experiencing development that we haven’t seen in previous cycles in New York, including the construction of four- and five-star hotels, which had already happened in other markets. “A dozen have opened or are under development,” he says. Even non-traditional locations, like TriBeCa and SoHo, have seen new high-quality, independent hotels. (Like the firm’s Smyth Hotel & Residences on 85 West Broadway.)

2) BIG NAME NOT REQUIRED

And NYC has the ability to absorb new supply—we saw 15,000 new keys between 2010 and 2011, all while increasing rates, Gemini Real Estate Advisors CEO Will Obeid points out. And you don’t have to be a big name to operate here unless you’re looking for a 600-room hotel, notes the owner of the boutique GEM Hotels. “The Ace Hotel on West 29th Street nailed it,” he says. “It’s got its finger on the pulse of the market and is a great brand.” There once was a huge need for brands (and there’s always a segment crazy about hotel rewards points), but the Expedias of the world minimize the need for those brand reservation systems. “You’re your own travel agent now,” Bob says.

3) SAFETY & DIVERSIFICATION

The challenge: equity investors and lenders see safety in traditional reservation systems, which may not work for a particular hotel, Will says. Outside of NYC, according to Bob (above), you need a flag to get a reaction from lenders. (No word on how banners or coats of arms affect them.) Barriers are not high in the outer boroughs, so they’re getting more hotels than they need and the stabilization period is protracted, the panelists say. But nothing in New York is easy, Mark added. Tribeca Associates has a hotel under development on 20 W 53rd St, across from the MoMA, a mix of five-star hotel rooms and residential condos with hotel amenties. Mixed-use can be better from a lender’s perspective—they love diversification of income.

4) LONG-TERM PERSPECTIVE

Moderator extraordinaire Sonia Kaur Bain, partner at Troutman Sanders. One switch Bob’s firm has made was moving away from 25-story hotels into more low-rise developments with larger rooms—it lowers construction costs and numbers work out a lot better. And construction prices will increase for the foreseeable future. But for now, Will says he’s still getting competitive pricing as subcontractors are hanging on by their fingernails. It’s a great time to develop if you can acquire land at a reasonable price, he says, because financing is available. Keep in mind: it takes a year for design, approvals, and getting a flag on board; two or three years to build; and another two or three years to stabilize, Bob warns.

The bright-eyed and bushy-tailed crowd.

Among the audience, we snapped Eugene Nicotra and Fred Grapstein, both of whom work in hospitality for Vornado, which recently acquired a 42% interest in the Crowne Plaza. Fred tells us the firm’s wholly owned, 1,705-key Hotel Pennsylvania hosted a record 1.1 million hotel guests last year, half from overseas. Fred says he also directs a 501(c)(3) women’s college summer softball program that finished third in the country two years ago, and Gene is the proud papa of new baby boy Joey.

A big shout-out to our sponsors at Emerge212, which operates boutique office, virtual, and concept space at 1515 Broadway and 28 W 44th St. The firm’s Keith Fearon, here with Meghan Betz, tells us that two new tenants have just signed at 1515 (next door to the morning’s event): MunchNYC, a digitized restaurant club that will be offering daily deals of at least 25% off at NY’s best restaurants; and Easy Vista (formerly known as Staff & Line), which provides IT service and asset management. Learn more about our sponsor here.

Keller Augusta Partners’ Kate Keller, Humanscale’s Ellen Hains, WorkSpaces’ Mindy Williams-McElearney, Keller Augusta Partners’ Jodi Shaw, and Marcus & Millichap’s Karen Dome. Good news from the real estate recruiters Keller Augusta—architecture and construction firms are hiring again, particularly in the multifamily sector. And tonight, NYCREW (Karen is prez) is holding a seminar on building your brand in the digital age (more info here).

Sonnenblick on land acquisition spree

LOS ANGELES—Sonnenblick Development LLC has invested US$100 million during the past two years to acquire seven tracts of land on which to build luxury resorts in the United States.

The US$100 million represents all the capital raised by Sonnenblick as part of an equity fund put together “when everyone else was running away from the hotel development business,” Bob Sonnenblick, the company’s principal, said during a recent telephone interview.

The seven full-service projects are in various stages of development, Sonnenblick said. He declined to provide details about the resorts, such as location, until the properties have broken ground. He did say the resorts would be in waterfront locations with golf courses. The land was acquired in 2010 and 2011, he said in a follow-up email.

“I don’t want to say I’m building on the west side of Manhattan and then have 10 other guys looking around the west side of Manhattan,” he said. In his email, Sonnenblick said the properties would be held under such flags as Ritz-Carlton, Westin and Hyatt. His firm will hire third-parties to operate the hotels.

He also wrote the firm intends to hold the properties for the “long term.” In addition to the seven land buys, Sonnenblick said the firm is doing three more development deals on the grounds of two “major” U.S. airports. The smaller airport hotels are “3-star” projects, he added.

Los Angeles-based Sonnenblick has other hotel developments in its history. The firm also was behind the Loews Santa Monica in California; the Boca Raton Resort & Club, a Waldorf Astoria Resort in Florida; and the Ritz Carlton at Treasure Hill in Park City, Utah. Sonnenblick said his firm is again jumping into the hotel development game in an effort to get out in front of the sector’s recovery.

Opportunity in the downturn

The economic downturn provided an opportunity for Sonnenblick to go on its buying spree.

“The lowered land prices and construction costs and interest rates make a lot of these deals pencil out better than they have in the last four years,” he said. “That’s part of our industry that excites me; that and in addition to that the fact that 90% of my competition is bankrupt and shoe salesmen somewhere.”

Though terms are not as rosy as they were a few years ago during the heady days of 2007, Sonnenblick was able to secure financing for the developments. Owning the land free and clear provides some sway with the banks, he said. He did not disclose how much equity the firm is providing for the projects.

Construction financing also is available—to a certain extent, Sonnenblick said. “I don’t (consider) 55% of construction costs a great loan,” he said.

Sonnenblick believes the hotel financing environment will loosen in 2012. By the third or fourth quarter of 2012, Sonnenblick said lenders should begin to see there is little threat to them if they open up to providing loans at higher loan-to-value rates.

CMBS problems in 2012

Still, it could well be the financing market that hurts the hotel sector’s attempts at a comeback. The US$25 billion in commercial, mortgage- backed securities that mature next year might present a big problem for the industry, Sonnenblick said.

The industry will not be able to refinance that big a chunk of CMBS debt, and instead of worrying about their properties, hoteliers will begin worrying about their properties’ debt, he said. Not focusing on their hotels will cause operating performance at hotels to suffer, Sonnenblick said. “It takes your eyes off the ball.”

12 December 2011 7:44 AM By Shawn A. Turner Finance Editor Shawn@HotelNewsNow.com

Copyright © 2004-2011 Smith Travel Research /DBA HotelNewsNow.com (HNN). All Rights Reserved.

Livermore to Begin Talks For a Hotel in the Downtown

The Livermore City Council approved a negotiating rights agreement with Sonnenblick Development LLC on a proposal to build a luxury hotel in downtown Livermore.

The council vote was unanimous, with some concerns about potential massing to be addressed in the near future.

The negotiations will provide terms for the purchase of property located at the southeast corner of Railroad Avenue and South Livermore Avenue. The site is currently occupied by SpeeDee Oil Change and a parking lot.

The property is designated as a hotel site in the Downtown Specific Plan. The developer has been involved with prior hotel projects including the Loews Santa Monica Hotel, the Waldorf Astoria Boca Raton Restort, and Le Rivage Resort & Spa in Sacramento. Proposed in Livermore is a four story, 192 room hotel with a restaurant, bar, meeting rooms, fitness center, pool and spa. The hotel will resemble a cluster of buildings.

Councilmember Laureen Turner requested a clarification on who owns the property. She also said she was concerned about the size of the structure and aesthetics, asking if the council could make changes in the proposal when it comes before it.

Eric Uranga, Assistant Community Development Director, explained that the size, type and look of the hotel would be part of the negotiation process. The terms and conditions of the agreement would come back to the council for approval.

Uranga explained that the site was previously owned by the Redevelopment Agency. It was transferred to the city earlier this year. Uranga stated, “It is in jeopardy. The ownership will be reviewed by an oversight committee, which will determine whether the land should be disposed of or if it can be held by the city.”

Councilmember Stewart Gary asked that the city take a look at all of the rooms and conference space that would be needed in the downtown. If not all of the rooms and meeting space required could not be accommodate on the proposed site, would the city need to provide a nearby parcel.

Gary also wanted the city to have a say in who would operate the hotel. He suggested that there are more boutique operators available than those listed by Sonnenblick. “Let’s go fishing,” he stated.

Councilmember Bob Woener also wanted to take a look at the massing of the proposed hotel as soon as possible. He wanted the council involved in the actual design before it had gone too far. “It is important to involve us in what it looks like,” he declared.

The negotiations are scheduled over a period of four months. That allows time for further design development and plans for a finance package to proceed. The council would have two more looks at a design before it would be finalized.

In the application, Sonnenblick writes, “Our vision is to develop a first class luxury hotel on a property that we believe is the finest site in the entire City of Livermore. Because it is also the gateway to the downtown area, it must make an architectural statement, instead of having a plain vanilla facade.”

According to Robert Sonnenblick, the hotel would draw visitors from the surrounding businesses and industries in the region, including the wine industry. Proposed are street level retail and/or restaurant space. The five potential operators for the Livermore hotel are Hilton, Marriott, Intercontinental Hotel Group, Hyatt and Starwood.