Downtown San Jose hotel part of a $3.8 billion nationwide deal

San Jose – Three Bay Area hotels are part of a $3.8 billion coast-to-coast lodging deal that gives one hotel in the transaction, the Marriott in downtown San Jose, a value that exceeds $200 million.

Brookfield Real Estate Funds, a leading investment firm, has bought Watermark Lodging Trust for $3.8 billion.

The transaction gives Brookfield ownership of 25 hotel properties totaling 8,163 rooms.

Brookfield estimates that it paid an average of $481,300 per key — or room — for a hotel portfolio, which is about one-third resort hotels and two-thirds full-service hotels in an array of urban markets.

At that per-key price, the 510-room San Jose Marriott at 301 S. Market St. Downtown could be valued at $245 million.

OpenComps, which tracks the hotel investment market, estimated the San Jose Marriott could be worth closer to $237 million.

Either of the two scenarios would represent a steep jump from both the pre-purchase price for the hotel.

In 2013, CBRE paid $83 million for the hotel, which at the time had 506 rooms. In 2016, Watermark Lodging paid out $154 million. The 2016 price was 86% higher than the 2013 price. The expected price of the latest deal will be 54% higher than the 2016 amount.

“This transaction demonstrates how Brookfield expects a strong recovery and return of the corporate traveler to high-end hotels in the Bay Area and Silicon Valley,” said Alan Ray, president of Irvine-based Atlas Hospitality Group. area housing area.

Despite the prospects for improvement in the hotel sector, the housing market may still have to go through a lot of whirlpools.

Across the street from the San Jose Marriott, the Westin San Jose, formerly known as the Sainte Clair Hotel, was purchased in January at a price that was lower than what the hotel paid for in 2017.

302 S. The Westin San Jose in Market St. was purchased in January for $62.3 million, down 2.7% from its 2017 purchase price of $64 million. The purchase price includes the price paid for the land, building. , furniture and intangible value for property in the hotel.

The deal also included the 336-room Ritz-Carlton in San Francisco and the 226-room Fairmont Sonoma Mission & Spa resort in wine country.

The hotel business is back in resort areas like Wine Country and Big Sur, with hotels in those two high-end areas commanding record prices per room in many instances.

“Sonoma is already seeing record numbers post-COVID and will continue to do very well,” Ray said.

Both the companies said the transaction was due to be completed during the fourth quarter of October-to-December this year.