The Abu Dhabi Investment Authority is looking to sell two luxury hotels, one in Miami and the other in London, PERE has learned.
The sovereign wealth fund, which declined to comment, is understood to be exiting the Marriott-run hotels after positive performance. ADIA bought three Edition-branded properties in 2014 for $815 million from Marriott, according to data provider Real Capital Analytics. Now, it is looking to sell the Miami and London hotels.
Both properties were extensively renovated following Marriott’s 2010 purchase. The London building, located in the Fitzrovia neighborhood, was constructed in 1835 and had been closed since 2006. Marriott opened the property in 2013 with 173 rooms and amenities including a gym. The London Edition features the Berners Tavern, a restaurant run by Michelin-starred chef Jason Atherton.
Marriott also gutted the Miami property, turning it into the Miami Beach Edition, a 3.5-acre property with 294 rooms that opened in 2014. Amenities include a spa and an entertainment center that includes a nightclub, bowling alley and ice-skating rink. The hotel includes Jean-Georges Vongerichten’s bar and restaurant, the Matador Room.
ADIA is beginning the sale process for both hotels, which could be sold together or separately in the coming weeks. Both properties are freehold assets managed by Marriott under long-term contracts. JLL is managing the sales process.
ADIA has invested in hotels for more than 30 years. It currently owns 96 properties globally, according to RCA, ranging from budget to luxury assets. The sovereign wealth fund has a dedicated hospitality team that focuses primarily on major cities but also opportunistically looks at resorts and other properties.
Growing institutional interest
Globally, the hospitality market looks healthy this year, property services company JLL said in a 2018 outlook report. However, the company does not expect “any meaningful growth in transaction volumes” because of macroeconomic and sociopolitical headwinds. JLL forecasted no change in volume for America, which last year saw $28 billion of transactions, and a 5 percent increase for Europe, the Middle East and Africa, up to $23 billion this year.
JLL noted private equity and institutional investors have increased their buying activity in recent years. Institutional investors represented less than 4 percent of buyers in 2014 but are expected to comprise about 14 percent of acquisitions this year.
ADIA’s Miami and London hotels will likely draw interest from international buyers, PERE understands.
ADIA is the world’s largest institutional real estate investor, with $46.9 billion in the asset class, according to PERE’s Global Investor 50 ranking last year.