SUNNYVALE — Two connected hotels on one property in a tech-rich section of Sunnyvale have been bought by a big investment firm, a sign that buyers seek some hotel properties in Silicon Valley despite widening economic uncertainties spawned by the coronavirus.
The investors bought an AC Hotel and an adjacent Tetra hotel that are physically connected to each other on a single parcel in north Sunnyvale’s Moffett Park district, Santa Clara County property documents filed on Dec. 7 show.
TPG Capital, acting through a Texas-based affiliate, bought the hotels, which are at the corner of Bordeaux Drive and West Java Drive in Sunnyvale, according to county public records.
Odyssey PropCo, the TPG affiliate, paid $60.6 million for the hotels, the property files show.
The seller was T2 Hospitality, an Orange County-based real estate firm that developed the two hotels, which are under construction.
AC Hotel and Tetra both are well-regarded brands of Marriott and are the type of hotel product that would draw a buyer, even in these murky times dominated by the impact of the coronavirus.
“TPG wants to buy in Silicon Valley, they want to buy new product, and they want hotels that are Marriott brands,” said Alan Reay, president of Irvine-based Atlas Hospitality Group, which tracks the lodging market in California.
Together, the two hotels will have 350 rooms, according to the website of the developer, T2 Hospitality.
The Tetra hotel, part of Marriott’s autograph collection, will offer 186 rooms and is located at 400 W. Java Drive.
The AC Hotel Marriott is at 1235 Bordeaux Drive and will contain 164 rooms, T2 Hospitality said.
“The two hotels will service travelers to some of the biggest companies in the world such as Google, Apple, Yahoo! and Lockheed Martin,” according to the T2 Hospitality site.
Investor confidence in Silicon Valley hotels is a welcome counterpoint to disquieting financial woes for some Bay Area hotels that have surfaced recently amid coronavirus-linked economic woes.
In early September, two South Bay hotels whose loans are delinquent tumbled into default on their mortgages, according to county property records.
The hotels with delinquent loans are Wild Palms Hotel, with 208 rooms, at 910 E. Fremont Ave. in Sunnyvale; and Hotel Avante, with 91 rooms, at 860 E. El Camino Real in Mountain View.
Separately, the owners of three other Bay Area hotels have told the respective lenders for the hotel properties that they are are willing to yield ownership of their properties to the holders of specialized financing vehicles known in real estate circles as collateralized mortgage-backed securities.
These other hotels in distress are Hyatt House Pleasant Hill, a 142-room hotel in Pleasant Hill, Hyatt House Pleasanton, a 128-room lodging in Pleasanton, and Club Quarters Hotel, a 346-room hotel in San Francisco.
Still, the two Sunnyvale hotels that have just been bought provide a hopeful sign for the future. The adjacent Sunnyvale hotels are located in a star-studded section of Silicon Valley.
Google occupies at least 1 million square feet in the vicinity and intends to develop more office space in Moffett Park on sites that it owns.
In addition, Amazon and Facebook have established huge campuses totaling at least 1 million square feet in that section of Sunnyvale.
“You have a lot of tech companies in the area, which is a big factor,” Reay said.