Phoenix Investors Group Buys Century Plaza Hotel

The landmark Century Plaza Hotel & Tower in Los Angeles has been purchased by a Phoenix-based investment group from Japanese sellers in a deal valued at $260 million, representing one of Southern California’s most costly hotel sales.

The hotel was one of the best-known trophy properties in California acquired by Japanese buyers during a 1980s investment spree. Many of those investments proved to be disasters, although it is unclear whether the current sale is at a loss.

Pivotal Group said Friday that it will remodel the 1,046-room complex and market the main hotel and an adjoining tower--which currently operate as a single property--under different names. The newer, 322-room tower will be promoted as an exclusive, five-star hotel while the older building will target a broader clientele, said Francis Najafi, managing director of Pivotal.

“Each will go after their own market niche . . . with different pricing and marketing strategies,� Najafi said.

One of the biggest and most valuable hotel properties in California, the Century Plaza Hotel & Tower, which opened in 1966, sits in the heart of Century City and is the largest meeting and conference facility on Los Angeles’ Westside. The hotel was a favorite of former President Reagan, who checked in so often during his years in office that it was dubbed “the Western White House.�

Pivotal, in partnership with DMB of Phoenix and an investment fund managed by Boston-based AEW Capital Management, purchased the property from an affiliate of Nippon Life Insurance Co. Pivotal said the purchase of the hotel and a yearlong remodeling program will total $260 million. It would not disclose the actual purchase price.

The money Pivotal plans to spend for the hotel “reflects its landmark nature on the Westside and the strength of the Westside [hotel] market,� said hotel consultant Larry Kantor.

Pivotal Group is a privately owned real estate investment and development company that owns properties throughout the Southwest, including master-planned communities in Phoenix and resorts in Utah. Last year it sold the Ritz-Carlton in Phoenix to Host Marriott Corp. for about $75 million.

Century Plaza Hotel & Tower is currently managed by Westin Hotels & Resorts, which is owned by Starwood Hotels & Resorts. Starwood’s chairman, Barry Sternlicht, late last year indicated his company’s interest in purchasing the Century City property outright. Najafi said his firm plans to retain Starwood as manager and perhaps use one of its other brands--which include Sheraton and W Hotels--for the tower portion of the Century Plaza.

The notion of splitting the hotel’s identity won positive reviews from industry consultants, who note the tower already has a separate entrance and front desk. The tower is connected to the older building, which has 724 rooms, by an underground concourse.

“It makes a lot of sense,� said Donald Wise, president of Newport Beach-based Wise Hotel Investments Inc. “They are already two separate hotels that happen to be joined by a long subterranean corridor.�