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.
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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