EOS Investors LLC has become the new owner of Viceroy L’Ermitage Beverly Hills, the celebrated five-star hotel that came under the possession of the U.S. government as a result of an international money-laundering scandal involving the hotel’s former owner, Malaysian businessman Taek Jho Low. As part of a court ordered mandate, the 116-key hotel had been held for sale and ultimately, EOS’s $100 million stalking-horse bid gained approval.
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EOS takes on ownership of L’Ermitage following reorganization and insolvency group Vedder Price PC’s appointment by the U.S. District Court to serve as special master overseeing the sale of the hotel, which was put up for auction in August 2020 with Keen-Summit Capital Partners LLC serving as exclusive real estate advisor. “Other bids were submitted but they weren’t qualified for one reason or another so therefore, we canceled the auction and sold to the stalking-horse bidder,” Michael Eidelman, attorney & chair of the Corporate Reorganization, Bankruptcy and Insolvency Group at Vedder Price PC, told Commercial Property Executive. “This was a specialized sale; it was really a trophy property and selling a hotel at this purchase price, we were pleased with the outcome especially during the pandemic.” Proceeds from the transaction are to be utilized for the benefit of the people harmed by the aforementioned acts of corruption.
Located at 9291 Burton Way, just a stone’s throw from Beverly Hills’ renowned Rodeo Drive, L’Ermitage welcomed its first guests in 1976. The eight-story hotel last changed hands in 2010, when Low acquired the asset, then operated as the 119-key Raffles L’Ermitage Beverly Hills, from Colony Capital’s Fairmont Raffles Hotels International for $44.8 million. Viceroy then took over management of the property, which has maintained its luster through a series of upgrades, including a $37 million comprehensive renovation in 2016. The luxury lodging destination features a rooftop pool, restaurant and bar, spa, fitness facility and, with an average size of 805 square feet, it boasts the largest guestrooms in the Beverly Hills market. As Tom Burns, vice president of EOS Investors LLC, said in a press release, L’Ermitage is irreplaceable hotel real estate in a sought-after luxury market with significant long-term barriers to entry.
Weathering the storm
EOS is planning a strategic capital investment at L’Ermitage, with the goal of capitalizing on the property’s iconic status and popularity among luxury travelers. Still, the U.S. hotel industry, even in sunny Southern California, remains highly strained due to the COVID-19 pandemic. The U.S. hotel occupancy level in the third quarter dropped 32.2 percent year-over-year to 48 percent, according to data from STR, marking the country’s lowest third-quarter occupancy level on record. However, some markets are faring better than others, including the Los Angeles/Long Beach area which, with an average occupancy level of 50.6 percent, was one of only four top 25 U.S. hotel markets to record an occupancy level above 50 percent in the third quarter.
And once the hotel sector regains health, L’Ermitage will still stand out as one of the most coveted luxury lodging destinations in the Los Angeles area. “Not only is it a trophy property but generally speaking, the hospitality business is down across the country and to be able to garner the price we got in the middle of the pandemic, it speaks not only to the sale process that was run but also to the fact that when this is over, this is a fantastic hotel,” Eidelman said.