EL SEGUNDO, Calif., Oct. 25, 2012 (GLOBE NEWSWIRE) -- Griffin Capital Corporation ("Griffin Capital"), sponsor of the Hotel Palomar tenant-in-common ownership platform, announced today the sale of the hotel for $58 million to a publicly-traded real estate investment trust. Hotel Palomar is a 196-room luxury boutique hotel located "South of Market" on 4th Street in San Francisco, California (the "Palomar"). The Palomar and its renowned Fifth Floor Restaurant and Lounge are managed by Kimpton Hotels and Restaurants ("Kimpton"), from whom the Griffin Capital affiliate purchased the property in August 2007. Griffin Capital was represented in the sale by Jones Lang LaSalle Hotels, which team was led by John Strauss.
Griffin Capital acquired the Palomar for $36.3 million, originated a $27.2 million first mortgage loan upon the acquisition, and raised $18.2 million from 31 tenant-in-common investors. At the time of purchase, a number of reserve accounts were funded to provide operating cash balances and renovation capital to be deployed at the Palomar for planned room and common area upgrades. By the end of 2008, the operating performance of the Palomar suffered as a direct result of the 'Great Recession.' In 2009, Griffin Capital restricted investor distributions to preserve capital and persuaded the tenant-in-common investors to reallocate a portion of the capital reserves toward the payment of debt service to avoid a default thereunder as it worked with the lender toward restructuring the loan. Simultaneously, Griffin Capital's asset management team, together with the assistance of its special asset manager, Rick Swig of RSBA Associates, and the Kimpton management team, worked tirelessly through the depths of the recession to trim operating expenses and carefully manage capital expenditures, while also exacting concessions from each party. According to Michael Escalante, Griffin Capital's Chief Investment Officer: "By the end of 2009, the Palomar's market value had deteriorated substantially. A concerted team effort through the lean times and leading up to the sale allowed Griffin Capital to return to its investors over 167% of their originally-invested equity, which translates to an average annual return exceeding 13%."
Julie Treinen, Griffin Capital's Managing Director, Asset Management, stated, "We take great pride in our ability to build consensus among competing constituents, while creatively and aggressively resolving difficult issues and this transaction certainly tested those abilities – particularly in the wake of a number of other notable and comparable San Francisco hotels and restaurants that were foreclosed and/or shuttered during this market free fall." Kevin Shields, Chairman and CEO of Griffin Capital, concluded: "Owning the Hotel Palomar through the depths of this past recession required considerable fortitude on the part of our investors, the hotel operator and the lender and we could not be more pleased with the perseverance of the entire team and ultimately the very positive outcome of this investment."
About Griffin Capital Corporation
Griffin Capital Corporation ("Griffin Capital") is a privately-owned real estate company headquartered in Los Angeles. Led by senior executives each with more than two decades of real estate experience collectively encompassing over $14.0 billion of transaction value and more than 400 transactions, Griffin Capital and its affiliates have acquired or constructed over 17 million square feet of space since 1996. Griffin Capital and its affiliates currently own and manage a portfolio consisting of over 12.2 million square feet of space, located in 27 states and representing approximately $2.0 billion in asset value. Additional information about Griffin Capital is available at www.griffincapital.com.
The Griffin Capital logo is available at http://www.globenewswire.com/newsroom/prs/?pkgid=14268
This press release may contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Such forward-looking statements can generally be identified by our use of forward-looking terminology such as "may," "will," "expect," "intend," "anticipate," "estimate," "believe," "continue," or other similar words. Because such statements include risks, uncertainties and contingencies, actual results may differ materially from the expectations, intentions, beliefs, plans or predictions of the future expressed or implied by such forward-looking statements. These risks, uncertainties and contingencies include, but are not limited to: uncertainties relating to changes in general economic and real estate conditions; uncertainties relating to the implementation of our real estate investment strategy; uncertainties relating to financing availability and capital proceeds; uncertainties relating to the closing of property acquisitions; uncertainties relating to the public offering of our common stock; uncertainties related to the timing and availability of distributions; and other risk factors as outlined in the REIT's prospectus, as amended from time to time. This is neither an offer nor a solicitation to purchase securities.
CONTACT: Jennifer Nahas Vice President, Marketing Griffin Capital Corporation firstname.lastname@example.org Office Phone: 949-270-9332 Cell Phone: 949-433-6860