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(RIVERSIDE, CA) -- The bargain-basement acquisition chute has opened in the U.S. hotel industry.

San Diego based Pinnacle Hotels USA has purchased the 292-room, 12-story Marriott Riverside in Riverside, California for $19.3 million or $66,000 per room.  Sunstone Hotels (NYSE: SHO) of San Clemente, CA was the seller.

Industry analysts tell the Real Estate Channel the hotel probably an initial net development cost of at least $100,000 per room.

Stan Kozlowski, senior vice president of CBRE Hotels, advised Pinnacle on the transaction.

"The acquisition is a timely opportunity for Pinnacle Hotels USA," says Kozlowski. "Using a variety of valuation metrics, the Marriott Riverside represents a compelling value, including being priced well below replacement cost with a persuasive capitalization rate on adjusted 2009 earnings."
 
"The Marriott Riverside is a valuable and timely addition to our owned real estate portfolio," says Dr. Bharat "Barry" Lall, president of Pinnacle Hotels USA.
 
"With a successful track record of contrarian investing, we believe select opportunities are beginning to appear in the hotel sector despite the deterioration in the fundamental backdrop."

Art Buser,  Sunstone's president and CEO, says "the sale of the Marriott Riverside demonstrates our ability to monetize non-core assets at an attractive valuation in a very challenging transaction environment.

"This transaction will improve our already strong liquidity position, and we are confident that over time, the net proceeds will deliver higher returns to our stockholders if deployed towards value-enhancing capital investments elsewhere within our core portfolio of hotels."
 
Pinnacle Hotels USA was founded in 1998 by Dr. Lall who acquired his first hotel in 1989. Since the recession of the early 1990s, Barry Lall has invested in over 80 properties. Pinnacle Hotels USA has been a net seller of hotels since 2006, trimming the portfolio from 23 hotels to six.

The company is opportunistically evaluating acquisitions amidst the recession and industry downturn," adds Lall.
 
Pete Dannemiller, executive vice president of Hodges Ward Elliott, represented Sunstone Hotels on the deal.

The 12-story hotel is situated in the heart of the historic downtown Riverside area,  adjacent to the Riverside Convention Center and is located within two miles of the University of California Riverside campus.

In addition to its 14,000 square feet of meeting space, the Riverside Marriott features a restaurant, lounge, gift shop, outdoor swimming pool and whirlpool, fitness room and business center. 

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