Historic Colony Palms Hotel in Palm Springs changes hands

A historic downtown Palm Springs hotel linked to mobsters and movie stars has been sold to Los Angeles investors for $15 million.

The 57-room Colony Palms Hotel was acquired by real estate developer Michael Rosenfeld and his Woodridge Capital Partners in a joint venture with an affiliate of Oaktree Capital Management.

The hotel was built in 1936 by Al Wertheimer, a reputed member of Detroit’s Purple Gang, which specialized in bootlegging and other criminal pursuits. The Colonial House, as the hotel was then called, had an underground speak-easy and a brothel reached via a secret staircase behind a pantry cupboard.

It was a popular getaway for such Hollywood legends as Clark Gable, Humphrey Bogart and Carol Lombard, among others.

The hotel remained a celebrity magnet under later owners including actress Amanda Leeds Howard and boxing champion Jack Dempsey. Regular visitors included Kirk Douglas, Frank Sinatra, Marilyn Monroe, Howard Hughes and Ronald Reagan.

Palm Springs lost its luster in the late 20thcentury, but has begun to recapture its appeal for young leisure travelers from Los Angeles, Orange and San Diego counties, said John Strauss, a real estate broker at Jones Lang LaSalle who represented the seller.

“There is a growing critical mass of trendy boutique hotels that have been renovated or opened new,” Strauss said. “It’s very pedestrian friendly.”

The Colony Palms was sold by an affiliate of Pacifica Capital Group, which acquired the property in 2004 and redeveloped it.

Rosenfeld has other hotel holdings with Oaktree, including the Hyatt Regency Century Plaza in Los Angeles and Fairmont hotels in San Francisco and Hawaii.

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