Carey Watermark Investors 2 Buys Embassy Suites in Denver for $170 Million
Carey Watermark Investors 2, a publicly registered non-traded real estate investment trust sponsored by W.P. Carey (NYSE: WPC), purchased the Embassy Suites by Hilton Denver – Downtown/Convention Center from Cornerstone Real Estate Advisors for $170 million.
The REIT’s total investment in the property is approximately $179.7 million, including a $170 million purchase price and $9.7 million of planned capital improvements and other acquisition-related costs. The company obtained $100 million in non-recourse debt financing, with a fixed interest rate of 3.9 percent and a maturity date of December 2022. The loan is interest-only for the first 36 months.
The Embassy Suites by Hilton Denver – Downtown/Convention Center hotel, which opened in December 2010, is a 17-story, 403-room property that was the first LEED Silver certified hotel to open in Denver and the first in the Embassy Suites system. The REIT plans to complete a guestroom soft goods renovation starting in the winter of 2016.
Property amenities include 26,000 square feet of meeting space, a full-service American-style restaurant and bar, an onsite Starbucks café, an indoor swimming pool and fitness center, and a three level subterranean parking garage with 185 spaces.
Michael Medzigian, chief executive officer of Carey Watermark Investors 2, said: “The acquisition of the Embassy Suites by Hilton Denver – Downtown/Convention Center allowed us to add a well-located, institutional-quality, full-service property in a strong market to the CWI 2 portfolio. Given the historical strength of the Denver market, as well as the development pipeline for office, residential and retail uses, we are confident that Denver will continue to be one of the country’s leaders in terms of RevPAR (revenue per available room) growth. Additionally, we believe many factors will enable the hotel to maintain its position as a top performer among full-service properties in downtown Denver, thereby providing attractive risk-adjusted returns for our investors.”
The hotel is located directly across the street from the Colorado Convention Center and is within close proximity to Denver’s downtown financial, cultural and convention districts. In addition to the Convention Center, the hotel is located near professional sports venues, shops, restaurants and cultural attractions, and is adjacent to a light rail station.
The Denver lodging market has a significant corporate base, strong convention business and a number of major downtown commercial, retail and residential development projects in the pipeline, currently totaling $1.5 billion. From 1987 to 2014, the market ranked in the top five in the U.S. on a RevPAR growth basis.
Denver-based Sage Hospitality will continue to manage the hotel. Sage Hospitality is one of the largest privately-held hospitality investment, management and development companies in the United States, operating more than 74 premium-branded and lifestyle hotels.
Carey Watermark Investors 2 is a publicly registered real estate investment trust that was formed to make investments primarily in the lodging and lodging-related sectors. Affiliates of W. P. Carey Inc. and Watermark Capital Partners advise the REIT and manage its portfolio.
