Hyatt Newporter, Other Hotels to Be Sold

The Hyatt Newporter, the first resort hotel built in Newport Beach, is getting its second owner in two years.

A Dallas real estate trust said Monday it has agreed to sell the 36-year-old hotel to affiliates of PaineWebber Real Estate Securities Inc. for an undisclosed sum.

Dallas-based Patriot American Hospitality Inc., which is moving to unload several of its hotel properties, also said it is selling its 50% stake in Courtyard by Marriott in Orange.

Patriot American said it agreed to sell seven hotels, including the Newporter, and to sell stakes in four other hotels for a total of $206.5 million in an effort to pare debt and raise capital. The sale to PaineWebber is expected to close by Dec. 23, Patriot American said.

In September, PaineWebber bought the Inn at Laguna Beach and four other luxury hotels along the coast in Monterey for an undisclosed sum. PaineWebber did not return phone calls Monday.

Analysts said the Newporter, which Patriot improved to some degree, is still a prime property in a prime location. “Even though it’s an older hotel, it fits the traveler’s expectations of a Southern California property,” said Bruce Baltin, an analyst at PKF Consulting in Los Angeles.

“The property is in very good condition,” said Alan Reay, an analyst at the Atlas Hospitality Group. He noted that a shopping development being built nearby will give the Newporter an even higher profile among travelers.

Patriot purchased the Hyatt Newporter, one of the largest hotels in Newport Beach, from a Seattle partnership in 1996. The hotel had been taken over by the federal Resolution Trust Corp. from a failed thrift in 1991.

But earlier this year, Patriot American announced plans to sell some hotels that couldn’t be converted to its main brand, Wyndham. The Newporter has a long-term agreement to remain with Hyatt that couldn’t be dissolved, Patriot American spokeswoman Suzanne Cottraux said.

Patriot American also agreed to sell the Hilton hotel in Del Mar; Park Place Hotel in Minneapolis; Holiday Inn San Francisco; Valley River Inn in Eugene, Ore.; Ramada Inn San Francisco, and Embassy Suites in Hunt Valley, Md.

The company also agreed to sell a controlling interest in hotel manager Interstate Hotel Management Inc. to affiliates of PaineWebber. The affiliates will pay $165 million, plus an additional sum if the hotels meet certain profit goals, Patriot American said.

Interstate Hotel was acquired in June as part of Patriot American’s $2.1-billion purchase of Interstate Hotel Co.

Patriot American also said it will sell another two hotels and half-interests in two others, including the 121-room Courtyard by Marriott in Orange, to Milton Fine, the former chairman of Interstate Hotel.

Fine, now a director of Patriot American, will pay $41.5 million for the properties.

Bloomberg News contributed to this report.