Carey Watermark Investors 2 Continues Hotel Buying Spree
Carey Watermark Investors 2 Incorporated, a publicly registered non-traded real estate investment trust sponsored by W.P. Carey (NYSE: WPC), purchased the San Diego Marriott La Jolla in California from HEI La Jolla for $137 million.
The REIT’s total investment in the property is approximately $147.3 million, including a $137 million purchase price, approximately $5.3 million in acquisition-related costs, and $5 million in planned capital improvements, according to a filing with the Securities and Exchange Commission.
Marriott La Jolla was reportedly the most expensive hotel sale in San Diego this year, and the third priciest in the state, according to the San Diego Union Tribune. Another recent purchase by the REIT, the San Jose Marriott, was the second most expensive hotel sale in the state with a price tag of $154 million.
The 14-story San Diego Marriott La Jolla, which includes 372 guestrooms and 24,000 square feet of meeting and event space, is located north of downtown San Diego and minutes from the oceanfront village of La Jolla and the Pacific Ocean. There are three food and beverage outlets located on the property, as well as a 467-space parking garage, outdoor pool and sundeck, fitness center, and business center. A total of $21 million of capital improvements have taken place since 2011, including a $17 million renovation completed in 2013.
“The opportunity to expand our West Coast presence and at the same time acquire a recently renovated, high-quality property allowed us to add a strong cash flowing asset in a submarket with very high barriers to entry,” said Michael Medzigian, chief executive officer of CWI 2. “We believe the hotel’s prime La Jolla location will allow us to continue to benefit from the strong demand generators in greater San Diego, while at the same time mitigating long-term supply risk as a result of the high degree of difficulty and expense that go along with new construction in this area.”
The hotel will remain under the management of HEI Hotels & Resorts, a hospitality owner and operator that operates 60 full-service, upper-upscale, luxury and premium select-service hotels and resorts throughout the United States.
Carey Watermark Investors 2, which invests primarily in the lodging and lodging-related sectors, went effective in February 2015 and has raised $449.3 million in investor equity since inception. As of March 31, 2016, the company held ownership interests in five hotels, with a total of 1,948 rooms.
