FALLS CHURCH, VA-JER Partners has sold a hotel asset it acquired in 2007, the Fairview Park Marriott, to a partnership organized by Thayer Lodging Group. The sales price for the 395-key, full-service hotel was not disclosed but a source close to the transaction tells GlobeSt.com that it traded at close to a 6% cap rate.
JER purchased the hotel for $108.5 million as part of a seven-asset sale from Bethesda, MD-based Host Hotels & Resorts. Last May, it paid off a large portion of the hotel's debt at a discount and extended the maturity date on the remainder of the loan.
When the loan restructuring is factored in, the deal was a profitable one for JER, Devin Chen, managing director, tells GlobeSt.com. "We are pleased that an investment made in 2007 has turned out so well for us." Chen declined to discuss specific pricing.
Located at 3111 Fairview Park Dr., the hotel includes 15,000 square feet of meeting space and is the only hotel amenity in Fairview Park--one of its selling points when JER acquired it. Over the past three years, JER invested $3.9 million, or $10,000 per room, to upgrade the lounge, restaurant, lobby, meeting space and fitness center.
The DC area’s lodging industry has seen several transactions close in the past few months after a dry period of close to two years. The reasons for the activity are partly due to the local price transparency reintroduced in this asset class--as well as the hotel industry’s larger recovery.
Notable deals include Pebblebrook Hotel’s acquisition of the Doubletree Bethesda Hotel and Executive Meeting Center for $67.1 million. The Watergate Hotel traded for $45 million and was acquired by Euro Capital Partners. The transaction that broke the ice, however, was LaSalle Hotel Properties’ $95-million acquisition of Sofitel Lafayette Square.
There is a lot of interest in DC area hotel assets right now, Chen says. "People feel this category will be the first to rebound. It took the biggest hit because it didn’t have multi-year leases propping it up. But now we are seeing a lot of capital chase very few deals, especially for assets in larger markets like DC and New York."
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
