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July 11, 2016
A Dallas-based REIT called Ashford Hospitality Prime said it sold the Courtyard Marriott South Lake Union hotel last week for $84.5 million in cash to Seattle-based Washington Holdings.
Ashford said in a press release that it realized about $15 million in net proceeds after repaying about $65 million in debt and other transaction costs.
The 250-room, seven-story hotel sits on 1.3 acres at 925 Westlake Ave. N., south of the AGC Building and northwest of the Museum of History & Industry. It was built in 1998 and has 207,656 gross square feet.
King County last listed the tax value at $56.5 million.
Washington Holdings President and CEO Craig Wrench said one of his company's strategies is to buy and build premium hotels on the West Coast. He said the South Lake Union property is the first hotel his company has bought in Seattle and they are open to other hotel acquisitions here.
“We think the hotel's performance will continue to benefit from the activity in South Lake Union, including the growing presence of Facebook, Google, the Allen Institute, the Bill & Melinda Gates Foundation and Amazon,” he said.
The hotel lobby, bar, dining room and meeting rooms were renovated last year in a project designed by Sera Architects. Future improvements could be in the cards.
“We do have some good ideas to improve the property but need to discuss them with Marriott before going public,” Wrench said.
Matthew Behrens, manager of capital market operations at CBRE, said the “explosion of development” in South Lake Union has stimulated demand for hotel rooms in an area that doesn't have a lot of hotels. He said the area is also cheaper for construction than the central business district.
In May, CBRE represented the sellers of the 234-room Springhill Suites Marriott between South Lake Union and the Denny Triangle. That property sold for $74.1 million.
Behrens said there are six hotels with 2,411 rooms under construction in Seattle, but only one in South Lake Union: a 146-room Marriott Moxee. He said there is probably another 4,000 more rooms in various phases of entitlement, but it's unlikely that all of them will get built.
According to Behrens, investors are eager to buy Seattle hotels because there are fewer properties here than in most other large cities. He said that is especially true of the upper-scale hotels, which have annual occupancy rates in the low to mid-80 percent range.
Another factor that's fueling the hotel market here is the coming expansion of Washington State Convention Center.
“We are in a very strong lodging market in downtown Seattle,” Behrens said. “We're very fortunate.”
While this is the first hotel purchase in Seattle for Washington Holdings, the company has provided mezzanine debt for several Seattle hotels, including the Four Seasons, Hotel 1000 and the new Hyatt House next to the Space Needle.
Washington Holdings manages and invests in real estate, mostly in the western U.S. Some of its local holdings are One Union Square, Two Union Square and Park Place.