City may ban hotel-condo conversions forever, approximately

No wonder St. Francis owner Laurence Geller is so obsessed with the city's hotel-condo conversion moratorium -- Board of Supervisors president Aaron Peskin wants to make the temporary, 18-month ban effectively permanent.

The SF Examiner reports that Peskin is proposing extending the ban for "at least a decade," but don't worry, you can get an exemption if you ask Aaron nicely.

And then ask the Planning Commission nicely.

And then ask the union officials, neighbors, activist groups and other Planning Commission lobbyists nicely.

Between this and recent developments in commercial finance, San Francisco hotels seem to be depreciating nicely.

Examiner: Supe aims to shield hotel rooms from condo conversions

Exclusive Flora pic! (... link. Exclusive Flora pic LINK. Still exclamation-mark worthy!)

The team behind high-end Mexican restaurants Dona Tomas in Oakland and Tacubaya in Berkeley are close to opening their Uptown Oakland joint, Flora.

I walked past the restaurant last night and spied a small group inside, putting on the finishing touches. It is looking like the casual cocktail cafe we were promised last year, with a definite Raymond Chandler, late 1940s feel.

My cell phone shots are awful, so go check out this picture, taken by one of my companions last night.

Michael Mina also rocking the Millenium

Nice scoop in the Chronicle today, Mina is going in to the Millenium Tower condo project:

• Mina + "his longtime wine director" Rajat Parr
• Named RN74 after Burgundy highway
• spring 2009 opening "at the earliest" (building itself not done until spring 2009)
  
• 4,700 square feet, with 70 seats in dining room, 60 in bar
• "moderately priced French-American cuisine ... A typical menu will offer five vegetable dishes, five fish, five pork and poultry items, and five meats."
• Mina: "I just want it to be very relaxd."

I'm a bit of a dunce -- I was tipped to something like this nearly two months ago and forgot to ask Mina about it when I had him on the phone last week. Sigh.

Limon or Dosa at Mint Plaza??

Like a sweet, sweet Julep on a hot Kentucky Derby day, everyone is grabbing at Mint Plaza, a dingy little lane where Martin Building Company is building a restaurant row to rival Belden Place.

The plaza includes three large restaurant spots, one spoken for by Portrero Hill bistro Chez Papa and the other dibbed by Russian Hill's Sushi Groove. Cult coffee roaster Blue Bottle has a café in 800 square feet, as well.

The third big spot was to go to the Castillo's family's Peruvian-Californian restaurant, Limon, but talks fell through.

Then, I was told by a source involved in the project, talks shifted to Dosa, Emily and Anjan Mitra's South Indian place about five blocks away in the same Mission District neighborhood.

Today, the Chronicle's Inside Scoop reports that Limon is back, "getting close to signing a lease."

Indian, Peruvian – the bigger question is whether Martin can make a culinary destination by photocopying neighborhood restaurants and tearing them out of their original, uh, neighborhoods. Hmmm. Worked for the Ferry Building, I guess.

Oh, and Chez Papa and Sushi Groove were supposed to open by Labor Day -- what happened to all that?

SF hotels face capital famine

Hi!

Hope you had a GREAT summer!

Did you have a GREAT summer?

Hope so!

Because now the money is gone!

Yup!

Gone!

Probably not a big deal. The money went away for the month of August, and may return in September, or October, or sometime in the fall, or maybe next year, or maybe not quite ever, but everyone expects it will probably come back.

But for now it's taken a little vacation. Or an extended sabbatical. Whatever.

Don't want to overstate things. By "the money," I just mean the commercial paper that underwrote 80 percent of all hotel finance. And by "gone," I just mean not being given out to anyone, anywhere, anymore.

This really is not a big deal, unless you're a hotelier. Or a restaurateur. Or in the construction industry.

Or a broker, or in interior design, or an architect.

Or in the hospitality industry. Or in a business impacted by the hospitality industry. Or in a business that touches in some way on real estate.

Or in a business that needs, like, capital.

In a nutshell, the problem is that most commercial lending was done through supposedly very safe "commercial paper," or short-term loans to reliable businesses.

But Jim Cramer's hedge fund buddies took some of these loans and invested them in subprime mortgages, junk bonds and probably high-grade Columbian cocaine, no is really sure at this point because we're only talking about hundreds of billions of dollars and who really tracks that sort of pocket change.

Mainstream banks like the one that runs your checking account thought this all sounded swell and started borrowing and lending money this way too.

No one worried too much because as soon as someone made one of these insane loans he could then chop it up into a million pieces and sell the pieces to other investors who didn't know or care much about what they were buying.

They just cared that the loan had been stamped "AAA" by the ratings agencies, who of course valued the loans using computers, esoteric math no one understood and inputs no one could agree on.

About a month ago, everyone finally realized that some of this paper was not backed by operationally sound businesses but instead by people lending money to typical American homeowners which, as you might imagine, is a batshit crazy business to be in. Then they realized they couldn't tell which commercial paper was being used badly and which was sound. Then they stopped issuing commercial paper, which is a way of saying they stopped loaning anyone any money.

Commercial paper underwrites 80 percent of hotel deals, according to Jones Lang LaSalle. Ha ha, pretty hilarious madcap situation, right?

So now hotels, who by the way were sort of supposed to be the saviors of the hard-pressed local restaurant industry, can't get cash and have lost about 20 percent of their total value in like a month or two.

A small fraction of the top hotels can still get money from what are known as "balance sheet lenders," aka people who actually have cash money to lend and aren't counting on reselling the debt to others to offload the risk and aren't like panicking or whatever. Also, if you had a deal closed -- truly closed, not just nonrefundable -- before the meltdown, it will generally still go through, which is why you will still see deals being announced.

The whole capital crunch nearly derailed the recent Hotel Palomar sale a couple of times, all the principals told me, but luckily it was far enough along to make it to the finish line.

More in the ...

Business Times: Credit crunch leaves S.F. hoteliers hungry (free link)

Bijou for sale

Joie de Vivre and its partners have put the 65-room Bijou on Union Square on the market for close to $10 milion, I reported in Friday's Business Times.

Kimpton still has Palomar on the market, and the Crowne Plaza future flag or owner is still up in the air.

Subscriber-only link until July: Bijou the latest to ride the wave of hotel sales

Michael Bauer gets his Izakaya

What Michael Bauer wants, Michael Bauer gets!

Well, except for a decent table where other patrons don't brush against him a million times an hour, or a small plates restaurant with any sense of pacing, or a respectful hostess half the time, or ... well ... maybe he can't exactly snap his fingers and get whatever he wants.

But he's getting Izakaya!

And the news comes within just two months after Bauer noted on his blog that "the Japanese izakaya way of dining has largely passed us by" in the Bay Area. Izakaya is Japanese bar food.

Exhibit A: The planned Japanese restaurant and baseball lounge at O (free link, see fourth paragraph) in the Japantown Miyako Hotel, soon to be renamed Kabuki Hotel, is supposed to focus on Izakaya dishes. Supposedly they have the designer who did Bix and Myth, they had not named the chef by the time I wrote that story but supposedly were excited about a local up and comer. This is a Joie de Vivre property -- look for close to a dozen new restaurants from them over the next two years, openings overseen by their new food and beverage director David Hoemann.

Exhibit B: SF restaurant Ozumo, which is planning two distinct restaurants in Oakland, is planning an Izakaya menu (free link) at the one carrying the Ozumo name, at Broadway and Grand Ave.


(Photo courtesy SiFu Renka)

New hotel and restaurant in old Pac Bell tower will be nicer than St. Regis, says architect

When the St. Regis hotel opened in San Francisco in 2005, its general manager said it would be more luxurious than anything else in town -- past the Four Seasons, past the Ritz, "top top ... really superior."

The hotel has been charging $400-500 a night and, from what I hear, not negotiating that rate down significantly for anyone.

Now there's another contender -- the "Jazz Era" Pac Bell building, which will become a hotel and condos under a plan from Wilson Meany Sullivan, which is about to pay $118 million for it (free link).

The architect for the building says the 70-80 hotel rooms will be "more intimate than the St. Regis with an even higher level of service." Perhaps they already have a hotel operator lined up, then, since there are a only a handful of companies that would fit that bill.

This is a Biz Times scoop but not by me: real estate reporter JK Dineen gets the credit.

Full story: S.F. tower to become luxe hotel / Wilson Meany Sullivan recasts AT&T building

(free link)

Ozumo on a roll in Oakland. Get it?? Shut up.

Ozumo is doing it YET AGAIN -- going for a new location in Oakland. They can't get enough of the Uptown district!

This is in addition to the new, second Ozumo at Signature Properties' Broadway Grand condo project.

Going beyond that done deal, the team behind Ozumo told me they plan -- but had not yet signed the lease to -- do a wine bar, wine shop and restaurant concept in the large basement of the historic (and attractive) Cathedral Building just a few blocks away from Broadway Grand. They have already applied for a liquor license.

My understanding, by the way, is that Ozumo will not be using the name "Ozumo" in connection with the new location, per agreement with their original Oakland sugar daddy/landlord Signature Properties.

For those who don't know, Ozumo is a swanky sushi place on the San Francisco Embarcadero near the financial district. Owner Jeremy James has been drawn to Oakland in part by lower costs there as the minimum wage rises in San Francisco.

I was tipped off to this story by The DTO, the Web site that broke the news. Go check it out! I'm still marking this "scoop" because I confirmed the advanced negotiations and plans and got details on the concept. Plus I'm MSM -- I'm evil like that. Muhahahaahahaa!

Business Times: S.F. sushi place plans second Oakland spot (free link)

Campton Place sale is richest hotel deal in San Francisco history; also first involving pig iron manufacturer

Campton Place just sold to a division of India's Tata Group for a record-smashing $527,000 per room.

Tata's Taj Hotels will pay $58 million for the 110-room property. Hotel consultant Rick Swig and Tom Callahan of PKF Consulting both say that blows other hotel deals out of the water on a per-key basis, surpassing the $470,000 per key for Ritz Carlton in 1998 and the $460,000 per key partner buyout at Four Seasons last year.

Tata is a massive conglomerate that makes cars, trucks, jewelry and pig iron, and yet they will still be much better at operating Campton Place's restaurant than the prior owner, hotel specialist Kor Group, Swig said. Apparently Taj is known for high service quality and a long-term commitment to their properties.

Kor didn't have a long-term commitment to Campton, selling it after less than a year and a half, during which time it managed to nearly destroy the restaurant's reputation.

I was chasing the story down last night. As it turns out, Tata put out a press release to Indian media Monday, and then Kor followed suit this morning in the U.S..

Business Times Web update: Campton Place hotel sale smashes record (free link)

Campton Place for sale

When Kor Group bought Campton Place a year and a half ago, it had four stars from Michael Bauer, ranking it among the top four restaurants within city limits, at least by the Chronicle's standards.

Campton Place's restaurant arguably made the reputation of the hotel, and was a key reason that Kor paid $400,000 for each of its 110 rooms, the city's richest hotel deal in seven years.

Things went downhill quickly after Los Angeles-based Kor started running Campton Place, its first SF hotel:

• chef Daniel Humm left for New York;
  
• Michael Bauer gave the restaurant a devastating review that cut it to two and a half stars and said, "it's clear that Campton Place is no longer playing in the big leagues;" and
  
• the city's debut Michelin Guide said the kitchen had "floundered" and did not award it a single star.

Now Kor has put the hotel up for sale, I reported in Friday's Business Times (free link). Given the hyperactive market for San Francisco hotels lately, Campton hopes to earn a profit on the property despite the fortunes of its restaurant.

If a sale occurs, Kor's experience in San Francisco will have been brief. If the price isn't right, it will clearly have been bitter. Campton is Kor's last hotel in the city. The company briefly owned, then sold, the shuttered Canterbury Hotel.

To be fair, Humm said his departure had was not a result of the hotel sale to Kor. Also, whatever faults the restaurant may have, its pastry chef seems to have developed a loyal following in some circles.

Full story: Los Angeles group to sell lone S.F. hotel (free link)

Correction: THIRD Out the Door in Pacific Heights

In yesterday's item on Charles Phan starting construction on his third Out the Door in Pacific Heights, I said it was the second Out the Door.

In reality, it's the third: One next door to the original Slanted Door in the Ferry Building, one in Westfield SF Centre and the new one. I forgot about the original because somehow in my espresso-addled brain it's just part of Slanted Door.

Charles Phan expansion to Pacific Heights now under way

Slanted Door chef-owner Charles Phan is opening a third Out the Door.

He bought a building in Pacific Heights where he is working on a 3,000 square foot restaurant. When I talked to him on the phone just now he was in the middle of demolition.

I have the address and more on the food concept in an update on the Business Times website today (free link).

I was going to mark this "scoop" but I just Googled and found 7x7 posted something to their website March 1.

7x7 people: When you're not busy ogling the owners of District, consider putting this sort of stuff -- you know, "news" -- on your blog. That and an RSS feed.

UPDATE: OK, I just did some more Googling, and can proudly say that other than tablehopper, Chowhound, 7x7 and the Zoning Board, I was totally first with the story. (So glad I didn't use the "scoop" tag. So very glad.)

Well, at least we know construction has started.

This post has been corrected from its original form.

Charles Phan, Soma Grand and guerilla marketing

SocketSite today reports as rumor that Charles Phan of Slanted Door is in talks to put in a restaurant at Soma Grand, a luxury San Francisco condo development that just opened a sales office.

It's actually not a rumor: Phan is indeed in talks. I heard the same gossip a week or two ago and called Charles. He told me there were talks but that they were preliminary and he had not decided whether to do anything yet. His publicist confirmed for me just now that this continues to be true.

I'm not holding my breath on this one. But I *am* fascinated by this rumor, because it's giving a significant amount of of free publicity and word-of-mouth to Soma Grand just as the development is offering units for sale.

SocketSite is a scrappy Web publication that doggedly follows the local condo market and the economics therein. The Phan/Soma Grand chatter has become pretty widespread and could certainly affect sales prices of units in the building, but if I were a buyer I would not spend an extra penny on the chance that this deal will happen, simply because it is so preliminary.

Even if it does happen, is Charles' hotness and quality level up to this point, no matter how high both might be, worth a premium?

Isn't there a significant risk that even if this deal goes through (again I'm not holding my breath) Phan, like any other chef, could

1. leave after his lease expires in five or ten years;
   
2. delegate to people whose quality isn't up to snuff;
   
3. create noise issues from tightly-packed, cocktail-swilling diners;
   
4. be on the unhappy side of a new dining fad
   
5. ????
   

-- I'm not saying this stuff will happen but there's enough of a risk that it makes you question whether there should be any premium paid by a condo buyer to be in Phan's building.

In the final financial analysis, when you are talking about an investment of upwards of $700,000, risks from interest rates, local economy, building quality, crime, and the school district, to name just a few, are of much higher importance than who is running the ground-floor restaurant.

And of course most buyers will probably not make their decision based on who is running the restaurants.

But the Phan rumor, as it spreads among individuals and from media like SocketSite, does help the developers of Soma Grand get people in the door on the cheap. It spreads the name of the development and lodges it in people's memory. It adds a halo of hipness and legitimacy.

This isn't just a restaurant rumor, it is free publicity in an increasingly cutthroat condo market. And it will make an excellent case study for a guerilla marketing class at some point, whether that was the intent behind the rumor or not.

Ozumo East is confirmed

I reported a month ago that Ozumo was likely to go into Oakland; I report today on the Business Times website that the deal has closed and Ozumo's Oakland location confirmed (free link).

Ozumo Owner Jeremy James told me in January:

"We're a well established, highly thought of San Francisco restaurant. Opening a second store in Oakland would be very comforting ... It always feels good being wanted."
...

"In terms of a more welcome business climate, Oakland is right off that bat," James said.

Ozumo's Oakland location will go into 8,000 square feet at the new Broadway Grand condo project in the Uptown district, at Broadway and Grand Ave. The project is still under construction but sales begin Feb. 24.

The new Ozumo will include an "Izakaya" menu of bar snacks.

There's more on Broadway Grand in the Chronicle. I confess I sat on this item for a few days and only corrected my delinquency when I saw it mentioned briefly in the Chron story this morning.

Farmer Brown wants to reap new place

Farmer Brown chef-owner Jay Foster wants to take over the Plush Room in the York Hotel, the hotel's new owner told me.

Personality Hotels is buying the York from CTwo hotels, plus the Maxwell Hotel from Joie de Vivre Hospitality, bringing its total stable of Union Square hotels to seven.

Personality is already landlord to Farmer Brown: the neo-soul food restaurant is located in the company's Metropolis hotel.

I learned all this at a party for the Diva hotel, which was recently renovated with the help of a bunch of up-and-coming artists. Personality Hotels founder Yvonne Lembi-Detert was excited about the new hotels, but gave no indication on how likely she is to let Farmer Brown run the Plush Room.

Prior to writing my story, I confirmed the hotel sales with CTwo and Joie de Vivre. But after we went to press, someone from Personality called to tell me that the loans for the acquisitions are not fully nailed down yet, so these are not quite done deals at the moment.

The Plush Room, aka Empire Plush Room, is now run by Razz Productions.

This all comes from a story I wrote on Personality Hotels (free link) in Friday's Business Times.

Hubert Keller's Burger Bar coming to SF

Fleur de Lys chef-owner Hubert Keller is bringing his Las Vegas concept Burger Bar back home to San Francisco, though he has not yet picked out a location.

Keller is also spreading Burger Bar to St. Louis, where one is already under construction as part of a casino project, and possibly to Hawaii.

Keller told me Burger Bar is doing close to 1,000 covers per day in Las Vegas and that he is hoping it will soon cross the $7 million per year revenue mark. Bon Apetit credits the ultra-luxe hamburger joint with spawning a long line of imitators after it opened in March 2004. High end burger places have since opened from chefs like Laurent Tourondel and David Burke in New York, Bobby Flay in Las Vegas (reportedly) and of course Thomas Keller in Napa Valley, who is hoping to soon uncork his burger place.

(Of course New York chef Daniel Boulud was serving a high-end burger at his DB Bistro Moderne by the start of 2003, before Keller’s Burger Bar, but that was not a standalone burger joint.)

I report all this in today's Business Times, along with what neighborhoods Hubert is looking in, what other restaurateurs think of the idea and why SF may be more perfect for Burger Bar than Las Vegas.

Limon the leading restaurant at Old Mint

Alongside the forthcoming redevelopment of San Francisco's Old Mint is the transformation of little Jessie Street behind the mint into an attractive, pedestrian-friendly plaza. Fronting the plaza will be three restaurants, installed into the ground floors of various historic buildings across from the Mint.

Upstairs from the restaurants will be condominiums and lofts.

Most prestigious among the restaurants to be located in these attractive old structures will be an entry from the Castillo family, proprietors of the Peruvian restaurant Limon in SoMA. The Limon team is putting in the restaurant at 418 Jessie Street.

This information comes courtesy of a nice scoop in Tablehopper on Wednesday, which I somehow overlooked until last night.

Levende Lounge and Ozumo expanding to Oakland

Levende Lounge has just taken out a lease for "Levende East" in Old Oakland, at the former Rex's bar and grill at Washington and 8th St, right across the street from another SF transplant B's (from the Boxed Foods people).

Ozumo is "eager" to close late-stage negotiations with Signature Properties at Broadway Grand in Oakland's Uptown district. Though this is much further along than the Town Hall deal that fell apart, it's never a sure thing until the doors open.

And, as reported elsewhere, Rich and Rebekah Wood sold Frascati in Russian Hill to open Wood House in the former Grasshopper in Oakland's Rockridge district. (As not reported elsewhere, they are bringing over their old Frascati executive chef, Maximilian Dimare.)

Three makes a trend, so I dig into the three deals in a front page story in today's Business Times (free link).

All restaurants involved site rising costs in SF as at least one of the reason for crossing the bay. Downtown Oakland restaurants are also just a few minutes from SF by BART or, on good days, bridge, which makes it easier to train and oversee staff. Some of the owners live in the East Bay. There's also the building boom in downtown Oakland, combined with the scarcity of existing high-end restaurants.

MGM Grand to San Francisco? Maybe. Someday.

Using money from the United Arab Emirates, MGM Mirage is looking to develop hotels without casinos, the Wall Street Journal reported.

Right now the company is looking at Abu Dhabi, Las Vegas and the UK. In June it opened the first of three towers that make up a condo-hotel project in Las Vegas, known as The Signature at MGM Grand but not directly connected to any casino properties.

It is not inconceivable the hotel firm could end up in San Francisco, particularly if it abandons the tight focus on casino properties. After all, San Francisco is a key global travel destination, in the top 5 of U.S. cities easily. And there are historic properties like the Palace, Mark Hopkins and Crowne Plaza that could be bought up and re-launched, and opportunity sites in the TransBay Terminal redevelopment area that are either intended for hotels or strong candidates.

Hunting for space now in San Francisco is Starwood Capital Group -- not to be confused with Starwood Hotels and Resorts, which was started by Starwood Capital Group but is now unaffiliated. Starwood Capital CEO Barry Sternlicht has a new green hotel concept called "1" Hotel and Residences, and has named San Francisco as a potential expansion city, as I reported in October.

Italian boss says 'no chains' at Jack London Square

The new food hall at Jack London Square in Oakland will all but ban national chains, I write in the Business Times Wednesday.

I spoke with slow food leader and Jack London Square resident Renato Sardo, who has been hired as a consultant by developers to lord over the leasing of the food hall. His advisory committee includes representatives from green investing funds and plenty of Slow Food International vets, including PR queen Eleanor Bertino.

The committee's guidelines, due out within a few weeks, will emphasize

• local producers
• quality producers
• environmental sustainability
  
• small producers

The committee would also like to see a farmer's market at the food hall, known as Harvest Hall and set to span 185,000 square feet, including 18-22 restaurants and a grocery store. The developers are counting on the size of the hall and its diversity of restaurants, plus the grocery store, to distinguish it from places like Ferry Plaza Marketplace, Market Hall in Rockridge or Epicurious Garden in Berkeley.

Sardo said:

We are not looking for national chains ... if there is a particular chain we regard as high quality or arrives with a particular concept, we may consider that. But probably we won't have big chains there.

Renato's initial consulting contract runs out in nine months.

Story link, free starting Jan. 2: No link to Oakland project for big chains

Hotel holiday sale, prices higher than ever

As predicted, a second wave of hotel sales is in full swing, reprising the mass trading of last winter.

Now up for sale:

• Crowne Plaza (400 rooms, $100-120 million, FelCor)
• Hyatt Regency Embarcadero (805 rooms, $200 million - $320 million, Strategic Hotel Capital, retail strip)
• Hotel Palomar (200 rooms, Kimpton, Fifth Floor restaurant)
• Cypress in Cupertino (225 rooms, Kimpton)
• Maxwell (153 rooms, Joie de Vivre)
• Villa Florence (182 rooms, Kimpton)
• Prescott (140 rooms, Kimpton, Postrio restaurant)

Sold or in the process:

• Renaisance Parc 55 (1,010 rooms), Oakland Marriott (484 rooms), Oakland Courtyard (157 rooms) (Larry Chan to Rockpoint, Highgate and a Hong Kong group, Highgate did not go in on Oakland properties) ($250 million) (still in process)
• Commodore (110 rooms) (Joie de Vivre to anonymous buyer converting to residential)
• Monticello Inn (91 rooms) (Dern Greinetz to Larkspur Hospitality) (Kimpton managed)

I detail the most recent deals in the Friday Business Times.

The only sale so far, the Renaissance Parc 55, does not bode well for pricing, so people are watching to see how the other deals play out. But there seems to be plenty of capital still in the market, and plenty of confidence business will continue to improve in San Francisco.

Issues of panhandling and cable car fares aside.

The power of a marquee restaurant

Per room sales price, Campton Place, paid by Kor Hotel Group, fall 2005: $400,000

Per room sales price, Renaissance Parc 55, the fourth-largest hotel in the city, paid by Rockpoint Group and Highgate Holdings, fall 2006: $170,000

Same brokerage firm. Same neighborhood.

Management matters. Branding matters. Food matters.

Free link: S.F.'s Parc 55, Oakland Marriott sold: Larry Chan makes trio of hotel deals fetching $250 million (Oct. 27)