Magna Hospitality snaps up South San Jose hotel for $16M

Buyer aims to convert 115-room property to a Hampton Inn

Magna Hospitality Group has paid nearly $15.8 million for a 115-room hotel in South San Jose with plans to convert it to a Hampton Inn.

An affiliate of the Rhode Island-based hotel investor bought the Wingate by Wyndham San Jose hotel at 5190 Cherry Avenue, as part of a four-hotel portfolio, the San Jose Mercury News reported.

The deal for the hotel next to the Almaden Ranch shopping center anchored by Bass Pro Shops came out to $137,000 per room.

Magna Hospitality intends to convert the three-year-old hotel into a Hampton Inn, according to a state license application.

To help bankroll its purchase of the four hotels, it obtained $77.5 million in financing from Western Alliance Bank. The names or whereabouts of the other three hotels were not disclosed.

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In addition to the purchase financing, the loan funds might also be used to upgrade the San Jose hotel to rebrand it as a Hampton Inn.

Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the California lodging market, said the acquisition could be a good move for Magna, as it would have cost twice as much to build a new hotel.

“You are going from the Wyndham reservation system to the Hilton network,” Reay told the Mercury News. “You are targeting higher-end business travelers. This will result in higher revenue and bigger profits.”

Early last year, Magna Hospitality sold a property entitled for a 149-room hotel in Union Square to Portland-based Schnitzer Properties for $11.75 million.

— Dana Bartholomew

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325 West 33rd Street and Magna Hospitality CEO Robert Indeglia (Google Maps; Magna Hospitality)
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