Partnership Buying Large DC-Area Marriott
The team of Oaktree Capital and Woodridge Capital has agreed to pay just over $180 million for a large Marriott hotel in Northern Virginia.
The 583-room Key Bridge Marriott, in Arlington, was the second hotel ever to fly the Marriott flag. It’s trading for the first time, having been owned by Host Hotels & Resorts and its predecessors since it opened in 1959. Eastdil Secured is brokering the sale on behalf of the Bethesda, Md., REIT.
The price equals about $312,000/room. Oaktree and Woodridge — Los Angeles investment shops that have partnered on a number of major hotel deals — plan to invest roughly $20 million on extensive renovations to update the property and potentially reduce the room count. They are also likely to explore additional development on the approximately 5.5-acre site. The upper-upscale hotel will continue to operate under a brand contract with Marriott International of Bethesda, Md.
The high-rise property is at 1401 Lee Highway in the Rosslyn section, at the foot of the Key Bridge, which connects Arlington to the Georgetown section of Washington across the Potomac River. The hotel includes 17,000 square feet of meeting space, restaurants, indoor and outdoor pools and a fitness center.
While financials for the Key Bridge Marriott were unavailable, upper-upscale hotels in Arlington were 81.5% occupied during the first nine months of the year, down slightly from the same period last year, according to STR. Room rates rose 3% during that period to $174.99. Consequently, revenue per room grew 2.3% to an average of $142.54.
The hotel was opened by Bill Marriott, founder and chairman of his namesake company. The leasehold interest in the property remained in the Marriott portfolio until 1993, when the hotelier spun off its real estate assets in a company that eventually became Host. Last year, after a decade of negotiations, Host acquired the land beneath the building for $54 million. At the time, it was planning to explore a potential redevelopment of the site.