Carmel Partners Wins Auction For D.C.'s Wardman Park Hotel With $152M Bid
The historic Washington Marriott Wardman Park Hotel has found a buyer, potentially setting up a conversion of the property to residential.
An affiliate of Carmel Partners, an investor that primarily owns multifamily properties, won an auction Tuesday with a winning bid of $152.25M, court records show.
A hearing was held Thursday on the sale agreement before a Delaware bankruptcy court judge. The winning bid came after 129 rounds of bidding, an attorney representing the seller said at the hearing. The judge, John T. Dorsey, said he will be willing to enter an approval of the sale after seeing the final version, which will include some amendments discussed during the hearing.
"I’m satisfied based on the record that the sale is obviously an exercise of the debtor's business judgment," Dorsey said. "It was done at arm's length. There was an auction that was held that clearly resulted in a good result for the debtor, so I’m glad to see this auction process worked. The fact that there were 129 rounds of bidding is amazing."
Carmel Partners, which declined to comment, hasn't unveiled its plans for the property. But the purchase and sale agreement, entered into court records Wednesday, said the buyer plans to use the property for residential and not as a hotel.
The 1,152-room hotel at 2600 Woodley Road NW opened in 1918. It has 195K SF of event space and 95K SF of exhibit space.
The sale, first reported by the Washington Business Journal, comes after the previous owner filed a Chapter 11 bankruptcy petition in the U.S. Bankruptcy Court for the District of Delaware in January. The previous owner, an affiliate of Pacific Life Insurance Co., closed the hotel just prior to filing the petition.
In the petition, the owner said the hotel had struggled before the coronavirus pandemic due to growing competition from newer large convention hotels in the area, and it blamed Marriott International for its "failure to act as a reasonable and prudent operator of the hotel." Marriott sued the hotel owner in October, claiming it failed to provide enough capital to maintain the hotel's operations.
The owner retained Eastdil Secured to sell the property. Nearly 175 prospective buyers signed confidentiality agreements to receive more information, 31 toured the property and 13 submitted formal expressions of interest, the Washington Business Journal reported.
D.C. Deputy Mayor for Planning and Economic Development John Falcicchio said in a written statement to Bisnow that the District plans to work with Carmel Partners on its plans for the site.
"The Wardman Park site is a great opportunity for a mixed use community with retail, hotel and residential in a neighborhood where we need more affordable housing," Falcicchio said. "We look forward to working with Carmel Partners to ensure the site is reimagined in a way that creates jobs and housing."
Housing advocates had called for the District to acquire the hotel property for an affordable housing redevelopment. Mayor Muriel Bowser has focused on the affluent Ward 3 area as a target for more affordable housing development.
Two activist groups, the Ward 3 Housing Justice group and the Wardman Hotel Strategy Team, organized a rally earlier this week calling on D.C. to acquire the property. William Jordan, a member of the Wardman Hotel Strategy Team, told Bisnow Thursday he was disappointed to see the hotel sell to a private investor.
"We are clearly disappointed that the city did not acquire it," Jordan said. "We expected the city not to acquire it necessarily through the auction but to pick up the phone and negotiate to see if there was a way to get the deal done prior to the auction. We expected them to give it the old college try."
Jordan said he expects that if Carmel Partners redevelops the site, it won't have as much affordable housing as if it were led by the District.
"I can't see how they could pay $150M and not do the same old same old we've been seeing," Jordan said."You get whatever [affordable housing] is minimally required by law. That’s why I think it was important the city step in."
Carmel Partners has been investing in D.C. multifamily properties for at least 17 years. It acquired a portfolio of 11 communities totaling 865 units in June 2004 and later sold the properties, according to its website. It has renovated and sold six other D.C.-area multifamily properties, and it has invested in two projects under development: a 551-unit project near Union Market in partnership with Kettler and a 628-unit project near Alexandria's Braddock Road Metro station.