In its debut transaction, Carey Watermark Investors (CWI) has closed on an $88 million joint venture with Ensemble Hotel Partners, the owner of two waterfront hotel properties located in Long Beach, California. CWI's investment is $43.6 million, of which $20.8 million is equity.
The properties—the Hotel Maya, flagged as a Doubletree by Hilton, and a Residence Inn by Marriott—are the only waterfront hotels in the Long Beach market. Located on 12 waterfront acres, the Hotel Maya includes 194 guestrooms, 20,000 square feet of interior-exterior meeting space and a 60-slip marina. The Residence Inn, located on a three-acre waterfront site adjacent to the Hotel Maya, is a 178-unit, all-suite extended-stay hotel.
“This is an excellent example of how we can effectively enter into joint ventures to leverage our hospitality industry and asset management expertise,” CWI chief executive Michael Medzigian said in a statement. “These two properties offer value creation opportunities through a stabilized financial structure and a targeted capital investment program.”
CWI chose the two hotels because they are the only two waterfront properties in Long Beach. According to a source close to the deal, the venture also believes it is a good time in the investing cycle for such properties.
In turn, Ensemble partnered with CWI to pay down some of its debt and move forward with its strategy in the market. “This gives us an opportunity to clean up our balance sheet and move forward with several development deals in our pipeline,” said Ed Proenza, senior vice president of Ensemble.
CWI was formed at end of last year as a hospitality-focused venture between WP Carey & Co. and Watermark Capital Partners, a Lake Forest, Illinois-based private investment and management firm focused on lodging and related investments. Structured as a non-traded REIT, the new venture plans to partner with owners of existing hotels and resorts during the current slump in the market and position the properties to benefit from the forthcoming uptick, the source said.