Santa Monica hotels seek valuation at US$2 million a room

THE owners of Shutters on the Beach and Casa del Mar, popular hotels in Santa Monica, California, are exploring a capital raise to develop branded residences on adjacent land.

The hotel’s owners, Edward and Thomas Slatkin, are working with adviser Eastdil Secured on a recapitalisation that could value the hotels at about US$700 million, according to sources familiar with the effort who asked not to be identified citing private details. Additional land attached to a deal could be worth US$100 million, one of the sources said.

“This initiative is not a sale of the properties, but a step to unlock value and secure resources for long-term growth and continued success,” Thomas Slatkin said. “The project includes an opportunity to develop more than 350 branded residences adjoining the hotels, marking a significant addition to the properties.”

Hotel operations and guest experiences would remain unchanged in a transaction, Slatkin said. A representative for Eastdil declined to comment.

In recent years, a handful of California hotels have transacted at more than US$2 million per room, including Host Hotels & Resort’s purchase of Alila Ventana Big Sur in 2021. At a US$700 million valuation, a deal involving Shutters and Casa del Mar would cross that threshold.

Shutters has been a fixture on the Santa Monica beach since the early 1990s, when the Slatkins acquired the site and developed a luxury hotel. The brothers acquired and renovated the property next door, Casa del Mar, a few years later. The locations include trendy restaurants that attracted Hollywood stars.

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The hotels, which have about 330 rooms combined, were appraised at a combined value of US$605 million in a 2024 refinancing.

“There’s a clear precedent for rare coastal California real estate to transact at attractive valuations,” said James Cole, a partner at Ohana Real Estate Investors, whose firm has sold two hotels – the Montage Healdsburg and the Montage Beverly Hills – that also hit US$2 million per room.

Hotel transactions have been muted in recent years with would-be buyers blanching at higher-for-longer interest rates. But there’s been more optimism among investors recently that the market is improving. The owners of two Hawaii resorts – the Hyatt Regency Waikiki and the Grand Wailea Resort in Maui – have explored potential sales. BLOOMBERG