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Brookfield To Acquire Watermark Lodging Trust For $3.8B


Investment giant Brookfield has inked a deal for its private real estate funds to acquire Watermark Lodging Trust for $3.8B. Watermark's portfolio includes 25 U.S. hotels in 14 states totaling more than 8,100 rooms.

Watermark owns luxury assets, including such gateway properties as the Courtyard by Marriott New York Manhattan/Times Square West and The Ritz-Carlton in San Francisco, as well as resort properties such as The Ritz-Carlton Key Biscayne in Miami and Fairmont Sonoma Mission Inn & Spa in Northern California.

Brookfield will pay cash for all of the hotel owner's outstanding shares of common stock: $6.768 per Class A share and $6.699 per Class T share. The purchase price represents a premium of over 7.5% from the most recently published net asset values per share for both classes as of Dec. 31, 2021, according to Watermark, which is a nontraded REIT.

The sale is expected to close in the fourth quarter of 2022. It has been approved by Watermark's board of directors and is subject to approval by company shareholders.

"Hotels and resorts of this scale and quality are difficult to replicate," Lowell Baron, managing partner and chief investment officer in Brookfield's real estate group, said in a statement. "This portfolio is well positioned given its concentration in high-barrier-to-entry coastal destinations, gateway cities and the Sunbelt."

As of the end of April, U.S. hotel occupancy is nearly at the same levels it was in 2019, according to hotel data specialist STR, driven by pent-up demand among leisure travelers in particular. Average hotel occupancy stood at 66.6% at the end of the month, down 3.4 percentage points from the comparable week in 2019.

The average daily rate for U.S. hotels is up from three years ago and now is at $146.67, according to STR, a gain of 10.2%. Revenue per available room is now $97.72, up 6.4% compared with 2019.

Related Topics: Brookfield, Watermark Lodging