Tilman Fertitta Buys Montage Laguna Beach Hotel for $641MM

Montage Laguna Beach, Laguna Beach, Orange County, Dajia Insurance Group, Anbang Insurance Group, Atlas Hospitality Group, Strategic Hotels & Resorts, Ohana Real Estate Investors

By Vladimir Bosanac

One of the most remarkable hotels in Southern California has just sold, testing the market’s appetite for luxury assets along the Southern California coast. According to public records, the 259-room Montage Laguna Beach, located at 30801 South Coast Highway, sold for $641 million, or about $2.47 million, in a deal that closed Nov. 9 but only recently recorded.

Tilman Fertitta – an entrepreneur and owner of Landry’s and the Houston Rockets – bought the hotel. The seller is Chinese insurance company Dajia Insurance Group, which is liquidating this asset along with two other U.S. hotels that it attained as part of its takeover of Anbang Insurance Group in 2019. In July of 2021, The South China Morning Post reported that Chinese regulators were putting Dajia Insurance Group up for auction. The China Insurance Security Fund had offered to sell 98.78 percent of Beijing-based Dajia on the Beijing Financial Assets Exchange for 33.57 billion yuan (US$5.18 billion), according to the report.

The property was previously placed on the market in October with guidance pricing at upwards of $700 million. Industry sources, at the time, believed that the pricing on the hotel property in Laguna Beach could be achieved. The Orange County Business Journal reported that Alan Reay, president of Irvine-based hotel brokerage Atlas Hospitality Group believes there is a market for this asset.

“It could definitely go for that number. This is a trophy asset with irreplaceable real estate,” said Reay. “That figure was based on the trailing 12-month financials. With where the market is now, the value would be up exponentially. I could easily see an increase of 20 to 30 percent from last year’s appraisal.”

This appraisal came in at $521 million, and it was based on a refinancing of the property that secured a $340 million loan.

The hotel, which is operated by Irvine-based Montage International, opened as a flagship Montage property in 2003. It sits on a 30-acre beach parcel that also includes two pools, a 20,000-square-foot spa and three restaurants. The hotel was renovated in 2019, and it employs around 600 professionals.

Montage Laguna Beach was purchased in 2015 by Chicago-based Strategic Hotels & Resorts for $360 million from Ohana Real Estate Investors. A year later, Anbang Insurance Group purchased this organization and the 15 hotel properties it owned across the United States.

Despite Reay’s thoughts on this hotel’s ability to attract interest, the hotel industry throughout California has seen an overall decline in sales when compared to 2021. According to Atlas Hospitality Group’s 2022 Mid-Year California Hotel Sales Survey, individual hotel sales declined by 9.9 percent across the state. At the same time, total dollar volume fell by 33.6 percent.

However, the median price per room did increase during 2022 by about 12.7 percent to a new California record at $143,443 per room. While transactions as a whole are expected to continue at a slower pace, California still reported the second highest number of sales on record and the third highest in terms of dollar volume, according to the report.