CBRE Global Investors has acquired a full-service hotel in San Jose for less than replacement cost, according to the firm. The Los Angeles-based investment firm purchased the San Jose Marriott Hotel, a 506-room property in downtown San Jose, from Prudential Real Estate Investors (PREI).
CBRE bought the asset on behalf of its CBRE Strategic Partners US Value 6 fund, which closed on $1.1 billion in equity commitments from 22 institutional investors last year. Although terms of the transaction were not disclosed, data provider Real Capital Analytics lists the sale price as $83 million.
Located at 301 South Market Street, the 28-story hotel is directly connected to the San Jose Convention Center, which currently is under renovation and expansion. The Marriott is the newest hotel in the submarket, offering contemporary accommodations and amenities that include a swimming pool, fitness center, business center, 23,000 feet of meeting and event space and acclaimed restaurants.
PREI originally purchased the hotel in May 2011 for $43.5 million. SCS Advisors, the hotel management firm that originally developed the property in 2003, will continue to manage the asset. In addition to enhancing the management team and improving the tenant mix, the Strategic Partners US team is planning renovation work on the property.
“The Silicon Valley lodging market is fed by strong corporate demand from the significant concentration of high-tech companies in the region,” said Vance Maddocks, president of CBRE Strategic Partners US. “With strong current cash flow, the San Jose Marriott is an attractive business hotel with an added benefit of being directly connected to the now-expanding San Jose convention center.”
Through Fund VI, which exceeded its original target of $750 million, CBRE’s investment team has total purchasing power of $2.7 billion to acquire, reposition and sell institutional-quality properties in major metropolitan areas across the US. In addition to the San Jose Marriott, other assets acquired on behalf of the fund so far include Tollway Plaza I & II, two adjacent Class A office buildings in Dallas; 400 South Hope Street, a trophy office tower in downtown Los Angeles; an office property in Atlanta; and two multifamily assets each in Denver and Baltimore.