Wow! For a mere $71.6 million and a record setting insane price of just under $1 million per room, PA Hotel Holdings, backed by Silicon Valley giant, Larry Ellison recently closed a real estate deal for the Epiphany Hotel, a boutique hotel in downtown Palo Alto. San Jose Mercury News, George Avalos, covers the story.
A group controlled by software tycoon Larry Ellison has paid the equivalent of nearly $1 million per room for a boutique hotel in downtown Palo Alto.
PA Hotel Holdings paid $71.6 million for the 86-room Epiphany Hotel, according to Santa Clara County public records. That purchase was for the hotel structure and a ground lease, a transaction that experts say underscores the white-hot job market in Silicon Valley.
The deal was first reported in the Silicon Valley Business Journal.
Combing the price paid for the building with the value of the ground lease for the property, the hotel was bought by Ellison’s group for a record-setting $1 million per room, estimated Alan Reay, president of Atlas Hospitality Group, which tracks the hotel market.
“There is seemingly no end in sight in terms of how high the values are being pushed for quality real estate in Silicon Valley, especially in locations that are hard to duplicate,” Reay said.
But the purchase by Ellison’s group of the hotel also points to the strength of the underlying economy in Santa Clara County and the Bay Area in general, said Stephen Levy, director of the Palo Alto-based Center for Continuing Study of the California Economy.
“Santa Clara County is hot, downtown Palo Alto is hot,” Levy said. “A lot of the hotel stays in Silicon Valley are tied to business travel, so that points directly to the booming economy and job market in Silicon Valley.”
The grant deed for the property sale, which closed Thursday, shows that the controlling entity behind the purchase was Lawrence Investments. In February 2009, according to a filing with the Securities and Exchange Commission, Ellison, the long-term chief executive of software giant Oracle, was listed as the principal executive of companies called Mollusk Holdings, Cephalopod and Lawrence Investments, all based in Walnut Creek.
“People like Larry Ellison are putting their dollars to work in very safe locations,” Reay said. “People are paying these kinds of prices for long-term holds, and Larry Ellison is a long-term holder of real estate.”
Tech multibillionaire Ellison, co-founder of Redwood City-based Oracle, is no stranger to high-profile real estate purchases. In 2012, Ellison paid $300 million for about 98 percent of the Hawaiian island of Lanai. In 2013, to improve access to Lanai, Ellison bought Island Air.
In 2011, an Ellison-led group, Walnut Creek-based Porcupine Properties, paid $42.9 million for a 249-acre estate and golf resort in Riverside County that had been owned by a timber baron and his wife, Edra Blixseth.
Ellison also has bought beachfront properties in the posh Malibu Beach enclave, including a hotel, several houses and dining establishments.
The Palo Alto hotel that Ellison bought is at 180 Hamilton Ave., a few blocks from Stanford University and the Caltrain station and is in a hotbed of tech activity, startups and venture capital entrepreneurs.
“Years from now, people will look back at this acquisition and say it was a very good deal, as we are saying about San Francisco, Manhattan and other hot markets,” Reay said.