Pacific Coast Business Times: Dealmakers: Sale of Hotel Californian is 2021’s Deal of the Year in real estate

Near Santa Barbara’s waterfront, the rebuilt Hotel Californian opened its doors to overnight guests in September 2017.

And about four years later, Foley Entertainment Group — founded by Las Vegas Golden Knights hockey owner and Santa Barbara County wine magnate Bill Foley — purchased the luxury resort on Santa Barbara’s lower State Street for a reported $130 million.

Austin Herlihy and Chris Parker of Radius Commercial Real Estate represented the seller of the 121-room hotel, located at 36 State St.

“On a price per key, this hotel sale was probably the highest in Santa Barbara that we’ve seen and that shows this is a boutique market that people want to own hotels in,” Herlihy told the Business Times.

Foley Entertainment Group announced the purchase in September 2021 and did not disclose the transaction price, but Hayes Commercial Group’s 2021 market report for the third quarter of 2021 noted that Foley purchased the Hotel Californian “for an estimated price of $130 million.”

It was the first major hospitality acquisition on the South Coast since 2018, and “represents” a prominent vote of confidence in both Santa Barbara tourism and the waterfront trade area,” Hayes’ quarterly report stated.

Located just steps from the ocean, the property features three buildings occupying three corners of State and Mason streets, adjacent to the vibrant Funk Zone, near the Amtrak station and blocks from the central downtown corridor. The hotel has a fitness center, a spa, a rooftop pool, and event and dining spaces.

The transaction included the hotel’s 88-seat restaurant. In the company’s news release announcing the sale, Foley Entertainment Group said the space would serve as a future home of a Foley Food & Wine Society tasting bar. The tasting room is slated to open on the corner of State and Mason streets in early 2022, according to the Hotel Californian’s website.

“The spectacular Hotel Californian is a wonderful addition to our growing portfolio of entertainment and hospitality assets,” Foley, who established Foley Entertainment in 2021, said in a September news release. “Hotel Californian’s reputation for five-star service perfectly aligns with the philosophy of Foley Entertainment Group and allows guests to experience true luxury at one of the finest oceanside properties in all of California. What makes the acquisition even more special for us is our family’s connection to and love for the city of Santa Barbara. It is a magnificent place.”

As previously reported by the Business Times, the seller was a real estate development and investment company led by Mike Rosenfeld, the CEO of Los Angeles-based Woodbridge Capital Partners. The company, a Woodbridge Capital affiliate called 35 State Street Hotel Partners, bought the Hotel Californian property and two adjacent parcels in 2011. The firm tore down the old Californian hotel and built the current site, featuring the facade of the original hotel from 1925.