Large Hotel Transactions Are on the Rise

The DJIA rose 10 points while Nasdaq was up 29, the S&P 500 rose 9 points and the 10-year treasury yield was up .02 to 3.83%. Lodging stocks were mixed in dull trading.

JLL’s latest research revealed large hotel transactions are on the rise, with total single-asset hotel transaction volume for deals larger than $200 million reaching its highest level in eight years. The interest is particularly for luxury hotels situated in high-growth markets and urban centers. This is demonstrated by single-asset hotel transaction volume for deals larger than $200 million, reaching its highest level in eight years. As of August 2024, there has been a 59% increase in transaction volume for single-asset deals larger than $200 million compared to the same period in the prior year, with a total of $4 billion recorded. That is also up 15% from 2019 levels. JLL highlighted eight noteworthy closings this year, including the most recent sale of the Hyatt Regency Orlando for $1.1 billion, the Arizona Biltmore for $705 million, as well as others, including the Ritz-Carlton Key Biscayne, Eau Palm Beach Resort & Spa, 1 Hotel Central Park New York, and Hyatt Regency San Antonio. Blackstone’s recent sale of the Turtle Bay Resort in Oahu closed at a notable $725 million. That resort will be transformed into a Ritz-Carlton, with Marriott pitching in a record high $45 million in key money. JLL said they are expecting a continued increase in investor momentum for similar marquee, large transactions to continue over the short to medium term.

The pending completion of work on an underground parking garage in Old Town Scottsdale, Arizona, marks the start of construction on the AC Hotel by Marriott Scottsdale. Developer PEG expects the hotel to open in spring 2026 and will include 168 guestrooms, a lounge, kitchen, rooftop pool and bar, and 4,000 square feet of ground floor retail space. The adjacent Kimsey building will be preserved and is expected to house a leasing lobby, fitness room, and residential units. The project also includes 169 apartment buildings, which will share the underground parking garage with the hotel.

Following an $80 million investment, construction begins in the first quarter of 2025 in San Juan, Puerto Rico, on One Distrito, a hotel with 109 apartments. The project, to be built under the Apartments by Marriott Bonvoy banner and scheduled to open in mid-2027, is a dual-use project that incorporates a smaller-scale residential component in addition to the hotel concept. According to Prisa Group, the up-to-eight-story building will also house a fitness & wellness center with a yoga studio, resort-style pool, convenience store, and ample parking. One Distrito, which will be located at the entrance of the Miramar Convention District, is part of Prisa Group’s master vision for the area.

Lowe Enterprises has entered into a potential deal to sell the Hotel De Anza in Downtown San Jose, California to an undisclosed buyer. The purchase price of the hotel, managed by Hyatt Hotels, is between $10 million and $12 million. Newmark’s Lodging Capital Markets division holds the listing.

Hotel Granada is now open in Midtown Atlanta, Georgia following a two-year renovation and restoration project. Monomoy Property Ventures and Scarp Ridge Capital Partners were in charge of the top-to-bottom renovation. Aparium Hotel Group manages the hotel. The renovated 120-room hotel includes a restaurant, a meeting space, and a cocktail bar that’s in the works.

Vertical construction is inching closer for Downtown Phoenix’s next major hotel called The Edith. The $140 million, 17-story high-rise project will include 236 rooms, 23,000 square feet of meeting space, a fitness center and spa, a ground floor café and restaurant, and a rooftop pool and bar. A high-profile development team for the project now includes Sunbelt Holdings, BB Hotels & Resorts, Pacific Hospitality Group, and Mortenson. The hotel will be part of Pacific Hospitality’s Meritage collection.

Highgate and Royal Lahaina Resort & Bungalows announced the resort’s reopening in Maui, Hawaii. The oceanfront resort reopens with the debut of two new culinary venues: Lahaina Noon and Pineapple Moon, both conceptualized by TableOne Hospitality. Beyond its new restaurant and bar, the resort is home to 333 guestrooms, 127 newly enhanced bungalows, two oceanfront pools, and a range of wellness amenities and cultural activities. The resort is currently expanding its wedding and event spaces to include oceanfront wedding suites complete with dedicated concierge services and custom amenities. Additionally, its Alana Spa is set to debut a new oceanfront wellness oasis that includes six private suites and a refreshment bar.

Castle Peak Holdings announced Trailborn, a new hospitality brand inspired by the great American outdoors, is opening its newest hotel on August 29 in Highlands, North Carolina. Trailborn Highlands features 63 guestrooms and a spacious lobby lounge with a central fireplace, a retail marketplace, and plenty of private and communal outdoor spaces, including a spacious deck and lawn with picnic tables and fire pits. The Highlands Supper Club will debut as a destination restaurant and bar in a re-imagined historic log cabin. The hotel’s Nordic Spa will also open in time for fall and will feature a sauna and cold plunge showers.

Nuveen Green Capital has closed on the financing of $190 million in C-PACE capital for the Virgin Hotels Las Vegas. The project marks the first C-PACE financed deal in Clark County, as well as the largest in Nevada and the second largest C-PACE financed deal in the country to date. Virgin Hotels Las Vegas, a Curio Collection by Hilton property, is a resort and casino in Paradise, Nevada boasting 1,503 rooms and suites, over 130,000 square feet of indoor and outdoor meeting and convention spaces, a day spa, outdoor pools, gaming, 12 restaurants and bars, plus a music venue. C-PACE financing was used to recapitalize recently completed improvements to the hotel, including HVAC upgrades, LED lighting upgrades, window replacements, water-saving plumbing upgrades, building control systems, pool and spa improvements, and desert landscaping. Nuveen Green Capital partnered with HRHH PropCo, LLC to recapitalize the Virgin Hotel Las Vegas.

Sotherly Hotels received a notice from the Listing Qualifications Department of the Nasdaq Stock Market. Nasdaq notified the SEC that SOHO’s failure to file its quarterly Form 10Q report with the SEC in a timely manner puts them out of compliance with continued listing requirements. SOHO has delayed filing its quarterly report due to an ongoing evaluation of the presentation of the preferred units on the balance sheet of its operating partnership as permanent equity rather than as temporary equity (mezzanine), as well as ongoing evaluation of the accounting for other items. The company has until September 4, 2024, to submit an update to Nasdaq for its original plan to regain compliance with listing rules.

Personnel News

Deeksha Hebbar stepped down as the Chief Operating Officer of Sonder Holdings Inc. on August 22, 2024, with her resignation effective a week later. Martin Picard, the Chief Real Estate Officer, will temporarily take over her duties. Meanwhile, the company is reviewing its organizational structure and considering the future of the COO position.