SAN JOSE — Three Bay Area hotels are part of a $3.8 billion coast-to-coast lodging deal, with one hotel in the deal, the Marriott in downtown San Jose, valued at more than $200 million.
Major investment firm Brookfield Real Estate Funds has acquired Watermark Lodging Trust for $3.8 billion.
The transaction gives Brookfield 25 hotel properties totaling 8,163 rooms.
Brookfield estimates it paid an average of $481,300 for a key or room for a portfolio of hotels, with about one-third of its resort properties and two-thirds of its full-service properties in a range of urban markets.
The 510-room San Jose Marriott at 301 South Market Street in downtown San Jose could be worth $245 million per key.
However, one real estate services firm estimates the price of the San Jose Marriott could be closer to $237 million.
“This deal shows how Brookfield expects a strong recovery in high-end hotels in the Bay Area and Silicon Valley, as well as a return of business travelers,” said Alan Reay, president of Irving’s Atlas Hospitality Group, which tracks the Bay Area’s lodging sector.
The 336-room Ritz-Carlton in San Francisco and the 226-room Fairmont Sonoma Mission & Spa Resort in Sonoma Wine Country are also included in the deal.
Hotels in resort areas such as Wine Country and Big Sur have returned strongly, with hotels in these two high-end areas setting records for room prices on several occasions.
“After COVID, Sonoma has seen record numbers and will continue to do well,” Rey said.
The companies said the deal is scheduled to close sometime in the fourth quarter of this year from October to December.
Brookfield executives believe the hotels they buy should boom as the economy tries to recover from the fallout from the coronavirus outbreak, which has wreaked havoc on lodging and the travel industry.
“Hotels and resorts of this size and quality are difficult to replicate,” said Lowell Barron, chief investment officer at Brookfield Realty Group.
According to Brookfield, this is mainly because of the location of the 25 hotels.
“The portfolio is well-positioned given its concentration in high-barrier coastal destinations, gateway cities and the sunbelt.”