One of San Francisco’s biggest waterfront hotels is changing hands. Today, Sunstone Hotel Investors said it has signed a definitive agreement to sell the 821-room Hyatt Regency San Francisco at 5 Embarcadero Center to funds affiliated with Blackstone Real Estate for $279 million. The deal is expected to close in late July or early August 2026, and Sunstone has already started redeploying part of the proceeds into share repurchases, keeping the cash close to home for investors. The sale marks the latest headline-grabbing trade for a downtown property that remains central to San Francisco’s convention and business travel scene.
Deal Terms and Advisers
In a press release via Sunstone Hotel Investors, the REIT said the $279 million price works out to roughly $340,000 per key. The figure shows a 21.4x multiple on Hotel Adjusted EBITDAre and a 3.5% cap rate on trailing net operating income, reflecting how investors are still willing to pay up for prime San Francisco waterfront real estate. Eastdil Secured marketed the property and served as exclusive broker, while J.P. Morgan Securities acted as Sunstone’s financial adviser. Sunstone added that it has already funneled nearly $70 million of the expected proceeds into discounted repurchases of its common and preferred stock.
Sunstone’s Rationale
“We are pleased to announce the disposition of Hyatt Regency San Francisco,” the company said in its release via Sunstone Hotel Investors. Management framed the move as part of a broader strategy to recycle capital into more accretive opportunities rather than simply sitting on a trophy asset. Sunstone said it plans to spell out the expected impact of the sale on its full-year outlook around its next quarterly update.
How It Lands in San Francisco
The timing is notable for a market that has spent years trying to find its footing. San Francisco’s hospitality sector is showing tentative signs of recovery, with CoStar reporting that citywide revenue per available room has climbed in recent months. The same report highlighted that major events, including the Super Bowl in February, delivered a short-term jolt to performance. The 821-room property, renovated in 2018, remains managed by Hyatt Hotels Corp., which is expected to continue as a key operator for the asset under its new ownership.
Backstory
Sunstone picked up the Hyatt Regency San Francisco in December 2013 for a gross purchase price of $262.5 million, according to PR Newswire. Since then, the hotel’s downtown Embarcadero address and large block of meeting space have helped it maintain a solid position in the group and convention market, even as owners and operators keep a close eye on demand recovery trends across the city.
What to Watch Next
The transaction is slated to close in late July or early August 2026, and Sunstone has said it will provide more detail on the sale and its impact on company guidance with its upcoming quarterly results, per CoStar. Local hotel watchers and meeting planners will be tracking whether Blackstone’s funds opt to invest in further upgrades, reposition the property, or simply keep the existing management arrangement in place under Hyatt.
