Brookfield To Acquire Watermark Lodging Trust in US $3.8-billion – 25 Hotel Properties, Including Five Ritz-Carlton Hotels
Main Photo: Ritz-Carlton Philadelphia, one of the 25 hotels acquired by Brookfield in the Watermark Lodging Trust deal
Date: May 2022
Name: Watermark Lodging Trust
Locations: Across 14 US States
Number of Keys: 8,100
Seller: Watermark Lodging Trust, a non-traded REIT led by Mike Medzigian
Buyer: Toronto-based Brookfield Asset Management, possibly on of the largest investor fund into hotels globally – on a par with Blackstone
One of the world’s largest alternative investment management companies just got bigger. Toronto-based Brookfield is set to acquire Watermark Lodging Trust in a $3.8-billion all-cash transaction, which includes 25 properties, including five Ritz-Carlton hotels.
Watermark is a non-traded REIT led by Mike Medzigian, who has been with the company in different iterations since its formation in 2002, most recently as chairman and CEO.
Brookfield will acquire all of the outstanding shares of common stock of Watermark for $6.768 per Class A share and $6.699 per Class T share, including the assumption of debt and preferred equity.
The Watermark portfolio, which totals more than 8,100 rooms in 14 states, is predominantly luxury and upper-upscale assets in coastal cities.
“We are very pleased to reach this agreement with Brookfield, as it achieves our longer-term objective of a liquidity event, while providing our stockholders with an immediate and certain cash value,” said Medzigian. “The transaction’s premium to our most recently published Net Asset Values per share represents the strong execution of our entire team who have demonstrated the ability to find innovative solutions to address the challenges brought on by the COVID-19 pandemic.
The purchase price represents a premium of over 7.5 percent from the most recently published Net Asset Values per share as of December 31, 2021.
Brookfield continues to be active in the hospitality space, having acquired the Sofitel in Washington, D.C., in the midst of the pandemic, while selling a $1.5-billion portfolio of WoodSpring Suites properties in January this year.
“Hotels and resorts of this scale and quality are difficult to replicate,” said Lowell Baron, managing partner and chief investment officer in Brookfield’s Real Estate Group. “This portfolio is well positioned given its concentration in high barrier to entry coastal destinations, gateway cities and the sunbelt.”
Completion of the transaction is subject to certain closing conditions, including the approval of Watermark’s stockholders. The proposed transaction has been unanimously approved by the Watermark Board of Directors and is expected to close in the fourth quarter of 2022.
The Watermark portfolio comprises The Marriott Sawgrass, Fairmont Sonoma, Renaissance Chicago and several others, in addition to the five Ritz-Carltons in Fort Lauderdale, San Francisco, Santa Barbara, Key Biscayne and Philadelphia.
Price: $3.8bn
Price per Key: $469k
THPT Comment: What a fab-looking portfolio, at a great price for Brookfield….Let’s hope the EBITDA is as tasty the properties
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