Westbrook Partners has purchased controlling stakes in the Four Seasons hotels in San Francisco and Miami and the Ritz-Carlton in Boston from developer Millennium Partners, according to a report by The Wall Street Journal.
The report said Westbrook paid $35 million of the $90 million securitised mortgage of the Four Seasons in San Francisco, the $40 million debt held against the Four Seasons in Miami and the $25 million debt taken out against the Ritz-Carlton. The newspaper suggested the investment in the San Francisco hotel meant it could avoid foreclosure as it was struggling to meet its loan obligations.
The 277-room hotel was developed in 2001. While its accompanying residential space was sold soon after completion, the economic downturn forced down the hotel’s operating income and its occupational level consequently fell to 50 percent. The WSJ said Millennium stopped paying its loan on the building last summer to encourage the appointed special servicer on the securitised debt, LNR Partners, to relax its obligation. This plan failed to materialise, prompting Millennium to seek alternative sources of relief.
When the performance of the hotel started to improve – its occupancy rate rose to 82 percent this quarter – the developer managed to attract the attentions of private equity real estate firm Westbrook, which, since its formation in 1994, has invested more than $10 billion in institutional equity globally.
Westbrook was ranked 10th in the PERE 30 rankings in 2009 having raised $6.74 billion over five years. The rankings, compiled by PERE annually, ranks firms by how much equity they have raised over a five-year period for opportunistic and value-added real estate investment.