San Francisco’s Historic Villa Florence Hotel Trades Hands for $87.5M

AWH Partners and The Roxborough Group purchased the property with plans to fully reposition the asset.

By Kelsi Maree Borland | September 14, 2021

A partnership between AWH Partners and The Roxborough Group has acquired the historic Villa Florence Hotel in San Francisco for $87.5 million. The partnership plans to fully reposition the 189-room hotel by upgrading all guestrooms, the lobby and the restaurant.

AWH Partners and The Roxborough Group purchased the hotel outside of the normal marketing process. The investors acted quickly to buy the property, which they said was a historically well-performing hotel in an “irreplaceable” location, which is walking distance to Union Square, Chinatown and the San Francisco Museum of Modern Art. The property is also close to the Financial District and Moscone Convention Center, which attracts business clientele.

The pandemic created an opportunity to realize significant upside through a capital improvement plan at the property. The hotel was built in 1915, and in addition to the guestrooms, the property features three meeting rooms, totaling 1,400 square feet of meeting space, a business center, a fitness center, valet parking and a lobby bar. The partnership expects to complete its renovation of the property by the end of next year.

In late July, Pebblebrook Hotel Trust announced that it had entered into an agreement to sell the hotel for $87.5. The deal markets Pebblebrook’s second major hotel sale in San Francisco this year. In April, the firm also sold the 416-room Kimpton Sir Francis Drake Hotel in San Francisco for $157.6 million.

Pebblebrook isn’t the only investor shedding San Francisco hotel properties. Park Hotels & Resorts sold two of its San Francisco hotel properties in two separate transactions. The company sold Le Meridien San Francisco and Hotel Adagio for a total of $303.5 million, representing a 6.1% cap rate on 2019 net operating income, including capital expenditures. The sales price equates to $572,000 per key for the 531-room portfolio.