March 16, 2010
Hits On The Market, Saloon To Stay (We Hope)
While it’s not listed on the MLS, a plugged-in tipster notes San Francisco’s iconic Hotel Utah (500 4th Street) is on the market and asking $2,350,000 for its 28 "Tourist Rooms" and Hotel Utah Saloon.
When the Hotel Utah opened its doors in 1908, San Francisco and the Barbary Coast were going strong. Although, the city boasted a number of luxury hotels, this Hotel was something else entirely: this was where the people went. This iconic bar was standing before, during, and after Prohibition. The Deininger family originally opened the saloon, and commissioned furniture makers in Belgium to design and create its ornate bar-back. They also served the city’s best beer, Fredericksburg, brought to The Utah by horse and carriage and lowered into the cellar in wooden kegs.
Gamblers, thieves, ladies up to no good, politicians, hustlers, friends of opium, goldseekers, godseekers, charlatans, police, fancy miscreants — they all visited The Utah. And that was when South of Market was just a lonely section of the San Francisco waterfront. After the Bay Bridge was finished in 1936, SOMA came into its own. The saloon was home to longshoremen, merchants, metalsmiths, furniture makers, and people from the neighborhood, traffic flowing back and forth between San Francisco and the East Bay.
Ah, the good old days of fancy miscreants and ladies up to no good.
According to its offering memorandum, the building
currently should generate $186,757 in annual operating income with nine of its rooms rented on a month to month basis and the Saloon - which we assume will stay - paying $6,225 per month.
This deal actually is in the MLS
UPDATE (3/17): Our apologies, while the Hotel Utah property is in fact listed in the MLS (and apparently has been for the past 79 days), it appears as though the check-box to allow the listing to be found and viewed on the MLS's public facing site has not been checked.
Regardless, and perhaps more importantly, "the Hotel Utah Saloon has 5 years remaining on their current lease + two (5 year) options available."
∙ Offering Memorandum: 500 4th Street (Hotel Utah) - $2,350,000 [arausa.com]
First Published: March 16, 2010 3:00 PM
Comments from "Plugged In" Readers
From the numbers given, it generates $261k....doesn't sound too bad. I guess it depends on the condition and what needs fixing.
"Fancy miscreants".....I like that Is that a description of the real estate salesmen of that era?
Posted by: jon at March 16, 2010 3:13 PM
Ohhhh. "Should generate".
With a little TLC, "should sell" for $10 million dollars!
Posted by: jon at March 16, 2010 3:20 PM
I love how a place can be visited by "ladies up to no good" yet no "men up to no good". What were the ladies doing all alone that was no good ? Defacing US currency ? Sedition ? Crocheting pornographic shawls ?
Seems like a very low $/Sq.ft. though I'm thinking residential. Operating a hotel/retail combo I'm sure is an entirely different matter.
I wonder if the "do not play list" is still tacked to the beam over the stage, facing the band.
[Editor’s Note: We assumed that "being up to no good" went without saying for the men.]
Posted by: The Milkshake of Despair at March 16, 2010 3:43 PM
A friend of mine from out of town looked into this place and called me about it. Some group got it as a bulk foreclosure.
He said it was an SR0 up top. I don't think the city would allow any changes to that. He said he was told it needed a lot of work.
I think the 186K includes the saloon rent. $186K is all you get. That would have to pay for an attendant, maintanance-a lot of that, debt service, taxes, etc. It doesn't appear to cash flow.
[Editor’s Note: As noted above, the projected $186,757 is operating income (i.e., net of expenses) and does indeed include Saloon rent.]
Posted by: tipster at March 16, 2010 4:38 PM
They were trying to sell this last year on Loopnet, by the way.
Posted by: Jeff at March 16, 2010 4:44 PM
180K/28 = ~$20/day per room.
[Editor’s Note: Again, the projected $186,757 is operating income and the projections assume $40 per night for the non month-to-month rooms with a 15% vacancy. See the memorandum for the model.]
Posted by: EH at March 16, 2010 4:52 PM
I always like the Utah - always a nice place to get away from the "engineered" bars. The bands were good, and the people interesting and diverse.
Posted by: SFRE at March 16, 2010 4:57 PM
This is a really sad story. The last owners overpaid by a significant margin and couldn't make it work no matter how they tried. There were proposals to rescue the situation by making condos out of all or part of it, but as mentioned above the City smacked that idea right down.
Nothing kills a business like paying too much for property. Do the math before you buy or this might happen to you or an establishment you enjoy or both.
Posted by: Mole Man at March 16, 2010 5:37 PM
It was a cool place back in the day. Very family-like staff. The guy who wrote "The Electric Horseman" owned it.
Posted by: anonn at March 16, 2010 5:44 PM
Paying too much is a mistake. Borrowing too much is a catastrophe.
Posted by: Salarywoman at March 16, 2010 6:22 PM
$2.35 mil/$190k is ~ a 12 GRM I dunno, seems like a pain in the tooches to manage a glorified SRO for a 12er. You can get other apt bldgs (10 units and up) that will spit out 12GRRM- certainly in the loin all day long and maybe some miserable, ugly 60 's boxes in Richmond, sunset or outer mission/excelsior (note: security guard not included to visit bldg to collect your rent.)
Posted by: 45yo hipster at March 16, 2010 6:26 PM
"This is a really sad story. The last owners overpaid by a significant margin and couldn't make it work no matter how they tried. There were proposals to rescue the situation by making condos out of all or part of it, but as mentioned above the City smacked that idea right down."
Sounds like the "proposals" were the original plan all along. Why else would someone overpay by a significant margin?
Warning to investors, the city is not going to let you convert this into anything but your own personal bankruptcy. It's priced for an out of town or not-in-the-know investor who doesn't realize that.
Posted by: tipster at March 16, 2010 8:05 PM
I gotta feel bad for folks who've lost real money in real estate these days. I bet they won't have the free cash (or be inclined to spend it if they did) to buy a BMW M3 like I just did. Did I mention what a spectacular car that is? Its twice the horsepower (414 hp) of anything I've ever owned, with good looks, soft leather and handling to boot. HIGHLY recommend that car over, say, this still-overpriced SRO property.
Posted by: Jimmy (No Longer Bitter) at March 16, 2010 8:10 PM
Sold for 2.10M in 2K
Sold for 2.01M in 2003
That's a high turnover for a hotel as well as a tiny weeny appreciation and there's probably a good reason for it.
You can fool a home buyer to overpay by 230% using the lure of pride of ownership, but you can't fool a smart business person with 2 simple columns engraved in his brain.
LOL at the breakdown of income vs expenses. 20K scheduled maintenance/repairs in 2010. I know fixer houses that cost twice that when annualized over 20 years!
Anyone wants to try his luck at 2.35M? With 1/3 SROs and almost moribund tourism, is anyone feeling lucky?
Posted by: lol at March 16, 2010 8:19 PM
@Jimmy: Nice ride, though I prefer the looks of the E46.
Doesn't that car have oil problems with the twin turbos? In any case I prefer the stylings of the RS4 vs M3.
Posted by: SFRE at March 16, 2010 8:27 PM
Huh. Payroll is only $50,000? I would've figured more, though I don't know much about running a hotel.
Posted by: Alexei at March 16, 2010 9:33 PM
Actually the twin-turbo is the 335i and 535i. M3 is a normally aspirated V8. 335i also has well documented high-pressure fuel injector issues and a few other quirks that the M3 doesn't have. But having said that, any car with as many techno-gizmos as the M3 has under the hood is going to have issues eventually. It just comes with the territory.
But the TRUE beauty of the M3 is in the simplicity of the cabin -- steering wheel, gear shifter, a few pedals and a radio. The dials are pretty much redundant (you can't see them while driving at that speed anyway). No idrive. No paddle shifty things, no nothing. Just pure white-knuckle driving. You and the car, the clutch, the gears, the roar of the exhaust, its almost Zen-like. Total concentration, no distractions.
Posted by: Jimmy (No Longer Bitter) at March 16, 2010 10:01 PM
@45yo hipster: I agree. A 12 GRM is a bit too high for an asset like this. More-over, the 8% CAP is a bit low for something that is not a passive investment. If the management will run the hotel entirely (meaning, on-site 24/7, advertising, etc) then it works. I was working on my client's bed and breakfast marketing and we priced it at a 10% CAP simply because it's very management intensive.
Posted by: Serge at March 16, 2010 10:15 PM
Not that I am suprised by the posts on Socketsite, but it's still funny to hear people compare the GRMs / Caps of hotels to multifamily units. Or even just talking about multipliers / caps on hotels.
Goodwill and all. Sometimes I wonder about Socketsite! Public beware!!!!!!
Posted by: Paul Hwang at March 17, 2010 2:19 AM
It's a business 5X-10X EBIDTA. In this economy, this business is worth about $880k given the net income of $176k and presumed 0% revenue growth. The fact that it involves real estate is sort of incidental in this case.
Posted by: Jimmy (No Longer Bitter) at March 17, 2010 7:39 AM
I (a rare occasion) agree with tipster on this one: will the buyer find a foreign or out of town buyer foolish enough to part with $1 mil cash...at least what you would need to close here. Do you feel lucky? Well, do you punk!
^^^ Paul-huh? Care to elaborate?
All I was sayin' is that this deal, at that price basically bites.
Posted by: 45yo hipster at March 17, 2010 9:26 AM
Did he say 10X or only 5X EBIDTA?" Well, to tell you the truth, in all this excitement, I've kinda lost track myself. But, being as this is a glorified overpriced city-emasculated SRO Hotel, the most powerful money sucking machine in the world and would blow all your family assets clean off, you've got to ask yourself one question: "Do I feel lucky?" Well, do ya, punk?
Posted by: lol at March 17, 2010 9:43 AM
This deal actually is in the MLS - It's listed under it's real address - 500 4th Street. I undertand it has 28 tourist hotel rooms license along with the sale which is very valuable...
Posted by: Eddie at March 17, 2010 11:09 AM
This deal actually is in the MLS
Our apologies, while the Hotel Utah property is in fact listed on the MLS (and apparently has been for the past 79 days), it appears as though the check-box to allow the listing to be found and viewed on the MLS's public facing site has not been checked (which we might suggest someone double-checks).
But perhaps more importantly, "The Hotel Utah Saloon has 5 years remaining on their current lease + two (5 year) options available."
Posted by: SocketSite at March 17, 2010 11:34 AM
"I under[s]tand it has 28 tourist hotel rooms license along with the sale which is very valuable"
You mean, WAS very valuable.
Posted by: tipster at March 17, 2010 11:43 AM
I lived in the Hotel Utah back in 1976, when the saloon was still Al's Transbay. I was only 18 and it was my first foray out into the Big Wide World.
The view of the city skyline from the roof is jaw dropping.
Posted by: Matt Rosemier at September 9, 2012 5:44 AM