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Canary Hotel for sale to San Francisco group

By   /   Friday, January 13th, 2012  /   Comments Off on Canary Hotel for sale to San Francisco group

The downtown hotel is listed for $40 million, according to several industry sources.

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Canary Hotel, marketed as the only boutique hotel in downtown Santa Barbara, is for sale and the likely buyer is Kimpton Hotels & Restaurants, the hotel's general manager confirmed to the Business Times. Other hospitality insiders said the listed price is $40 million. (Stephen Nellis photo)

Santa Barbara’s Canary Hotel is on the market and boutique chain Kimpton Hotels & Restaurants is the likely buyer. The downtown hotel is listed for $40 million, according to several industry sources.

Canary General Manager Laura McIver told the Business Times that a sale to Kimpton is pending, and that the deal is expected to close within the next several months.

Current owner Edward Thomas Hospitality Corp., a Beverly Hills-based company, bought Canary five years ago for $31 million.

One industry source who has seen the offering package for Canary indicated a $40 million price tag — a dollar figure that would put Santa Barbara back in the premium game for hotel valuation, according to sources.

San Francisco-based Kimpton, which owns 54 luxury hotels and 56 restaurants, may be able to use its size and marketing muscle to fill more rooms and increase cash flow at the downtown hotel, located on the corner of Carrillo and Chapala streets.

Kimpton, a privately held company founded by Bill Kimpton in 1981, is known as a pioneer of the boutique hotel concept. Its existing California holdings include Cypress Hotel in Cupertino, Hotel Palmor in Los Angeles, Hotel Solamar in San Diego and nine San Francisco properties.

Neither Kimpton nor Edward Thomas’ corporate office returned multiple requests for comment left over several days.

News of the downtown hotel’s potential sale comes five months after Bacara Resort & Spa in Goleta, the largest hotel in the region, was sold to Ohana Real Estate Investors. That property changed hands for $104.4 million, according to county property tax records.

The site that’s now home to the Canary Hotel has been reinvented several times since the original Carrillo Hotel was built in 1923. Carrillo Hotel was a low-income housing complex for seniors.

In response to a 1994 state mandate that directed facilities like the Carrillo Hotel to be rebuilt or renovated to meet certain earthquake standards, the owners of the property elected to demolish the building rather than have it retrofitted.

The demolition created controversy in Santa Barbara, as some residents were against displacing the senior citizens who called the hotel home. To gain approval for a new hotel on the property, the owners were required to fund an endowment to pay for relocation of the 100 seniors who lived at the Carrillo Hotel. The owners set up the Garden Court Endowment, and by 2000, all of the former residents of Carrillo Hotel moved to Garden Court on De La Vina.

The Tynan Group was the original developer of Hotel Andalucia, Canary’s predecessor. After Carrillo Hotel was bulldozed, the site remained empty for years as Tynan struggled to find financing for the hotel project. The company secured a $21 million loan from First Bank & Trust and raised $10 million through a capital campaign. The Andalucia opened in December 2004.

Edward Thomas operated Andalucia for the Tynan Group, then purchased it in 2006 and assumed the debt.

In January 2008, the owners changed the property’s name to the Canary Hotel and marketed the property as Santa Barbara’s only downtown boutique hotel. Edward Thomas, which also owns Hotel Casa Del Mar and Shutters on the Beach in Los Angeles, catered to the downtown area’s shopping and cultural scene.

Canary is marketed as a destination for film industry executives, particularly in February during the annual Santa Barbara Film Festival. The hotel also caters to businesspeople.

Canary has 97 rooms and is also home to Coast Restaurant & Bar and a rooftop bar.

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