Japanese Group to Buy Biltmore for an Estimated $219 Million

The stately Biltmore hotel and office complex in downtown Los Angeles is being sold for a reported $219 million to Japanese investors, it was revealed Monday.

Biltmore Partners, a limited partnership, agreed to sell the Biltmore Plaza to T.A.T. Los Angeles Ltd., a partnership that real estate sources say is composed of two large, low-profile Japanese companies that own more than $1 billion worth of properties in Hawaii and California. The Biltmore Plaza includes the renovated 66-year-old Biltmore Hotel and office building and a 2-year-old office tower.

The transaction reflects renewed health in the downtown Los Angeles hotel market and would put an even bigger piece of downtown Los Angeles into the hands of foreign owners.

The agreement also follows by less than two weeks the completion of the sale of another major downtown hotel, the Los Angeles Hilton & Towers, for $168 million to South Korean investors, including Korean Air Lines.

Biltmore Partners, managed and primarily owned by the First Boston Corp. investment banking firm, did not reveal the identity of T.A.T. Los Angeles other than to say it is a Delaware corporation composed of investors who have been “very active in the development and ownership of hotel and residential properties in Hawaii and California.”

But real estate sources said the companies in T.A.T. Los Angeles own more than $1 billion worth of properties in Hawaii and California, including hotels owned under various names with U.S. partners. In Hawaii, those hotels include Hyatt and Westin properties, sources said.

Biltmore Partners also declined to reveal the sales price for the 700-room Biltmore Hotel, the 24-story Biltmore Tower, which contains 130,000 square feet of office space, and the Biltmore Court, a wing of the old hotel that was renovated into 235,000 square feet of office space.

But sources in the real estate community put the sales price at about $219 million. The transaction, which is expected to close within 90 days, reportedly is being financed by the Industrial Bank of Japan.

Biltmore Partners bought the then-threadbare hotel in December, 1984, for $75 million. The group subsequently spent $200 million sprucing up the hotel--$40 million went into the luxury hotel alone--building the tower and converting part of the hotel into offices.

The Biltmore price is difficult to compare to other properties because of the mix of hotel and office space, real estate and hotel experts said. But, they noted, the $168-million downtown Hilton deal, which was completed Nov. 2, included a slightly larger hotel with less office space that was nearly fully leased. Offices at Biltmore Plaza are only about 60% leased, real estate sources said.

The hotel will continued to be managed by Windsor Hotel Group, whose principals are Carlos C. Lopes and Eric Prevette.

The management company’s aggressive marketing of the hotel has done much to improve occupancy and raise room rates in the last 18 months, said Bruce Baltin, a partner in Pannell Kerr Forster, an accounting firm whose specialties include hotel consulting.

“From the marketing perception, it’s turned from a loser to a winner,” Baltin said.

“They’ve been well received in the market,” said R. Britton Colbert, a senior principal in charge of the hotel and restaurant practice at Laventhol & Horwath, a Los Angeles-based accounting firm. “You always like to see an older hotel that has been renovated come back.”

Occupancy in general has been rising at downtown hotels during the last few years, and the market has become increasingly competitive, Colbert said. The downtown Hyatt recently reopened after a renovation, and the Hilton also has been redone.

Hotels had a rough time of it until recently because there was little to bring people downtown to spend the night, he said. But a growing entertainment scene and more successful office buildings rejuvenated the market, he said. The expansion of the Los Angeles Convention Center in the early 1990s will help even more, he added.

Biltmore Partners took an aging dowager of a hotel that was gripped by less-than-genteel decay and turned it into a luxury showplace while retaining the building’s historic touches.

The hotel was built by a group of local businessmen at a cost of $10 million and opened on Oct. 1, 1923, to much fanfare.

In 1927, the Biltmore hosted a banquet at which the Academy of Motion Picture Arts & Sciences was formed and the design for the Oscar was conceived.

The hotel was billed as the “largest and grandest hotel west of Chicago,” and served as a rest stop for celebrities, royalty and several U.S. presidents, including Franklin D. Roosevelt, Harry S. Truman, John F. Kennedy.