Blighted Oakland Hotel Gets New Owner and a $24MM Chance at Reinvention

The former Clarion Hotel in Oakland, located at 8400 Edes Avenue had been sitting unoccupied for nearly a decade. The building is located just off of I-880 and Hegenberger Road, on a block that is just south of the Oakland Coliseum and the adjacent Oracle Arena, home of the Golden State Warriors. When traveling from points south of the arenas, it is the first of 6 hotel and motel buildings that one sees exiting I-880 and heading to a game, and the building stands as vivid reminder of the forgotten parts of the East Bay whose fortunes have not grown as quickly as they have in other parts of the Bay Area.

However, as of October 19th, the Houston-based K and K Hotel Group is the new owner of the structure that it hopes will not only help revitalize the blighted building but also create a setting that matches the region’s active market opportunity.

K and K paid $12 million, or roughly $43,500 per key on a net basis, to acquire the 276 room property from San Jose-based Riverview Capital Investment, which had the hotel as part of its Riverview Development IV fund, according to public documents. K and K will also invest an additional $12 million to upgrade the building and convert the vacant hotel into a state of the art hospitality resort, according to a statement.

Jagdeep “Victor” Singh of Olingers Real Estate Investments, Inc. worked as the broker on the transaction representing both the buyer and the seller.

The capital source for K and K’s acquisition and construction finance was Boston-based UC Funds, which has a working relationship with the buyer. This is UC Funds’ first investment in the Bay Area with K and K and their first since the Great Recession in the region.

“This is our first deal in Oakland. We’re an East Coast-centric organization, but we are targeting Oakland with this deal; we like what is happening there, and we hope we can bring a lot of capital to the region,” said Daniel Palmier, UC Funds’ CEO. “We breathe life in a lot of obsolete buildings with our entrepreneurial capital in markets where there is job growth and market activity such as the Bay Area.”

The owners are considering changing the brand of the hotel and are presently entertaining proposals from Ramada and Radisson as potential brands. The project comprises four vacant buildings ranging from two to six stories. Upon completion, the full-service hotel will offer guests access to amenities including an outdoor pool, restaurant/bar area, banquet hall and a fitness center, according to UC Funds.

Construction should last approximately 15 months, with an early 2017 expected date of completion and target opening date.

“UC Funds is excited to team up with this repeat client to unlock the full potential of this previously neglected site. UC Funds is targeting the Oakland market because it is entering a period of sustained growth and development. This project is poised to capitalize on that opportunity,”’ said Ross Pemmerl, senior underwriter at UC Funds.

UC Funds is looking to add additional capital opportunities to the Bay Area market in the near term. The company is aggressively looking to do between $150 million to $200 million in deals in the Bay Area over the next 12 to 18 months, according to Palmier. The firm is a privately-held, entrepreneurial lending institution, focused on multifamily, retail, office, hotel, industrial/warehouse, adaptive reuse and construction assets nationwide. They have provided over $1 billion dollars of capital solutions in 2015, a number that they look to continue growing.

8400 Edes Ave, Oakland, CA 94621