JER Turns a Profit on Sale of 395-Room Fairview Park Marriott in Coveted DC Market

July 15, 2010
By Barbara Murray, Contributing Editor

Many commercial real estate properties acquired in the big-ticket transaction days of 2007 are not yielding notable profits in sales right now, but there are exceptions, like the 395-room Fairview Park Marriott in Falls Church, Va., just outside of Washington, D.C. Three years after acquiring the hotel for $108.5 million and implementing a $3.9 million renovation program, JER Partners has sold the Fairview Park Marriott to Thayer Hotel Investors V L.P. at a price that exceeds the amount JER had paid to buy the hotel and upgrade it.

Both McLean, Va.-based JER and Annapolis, Md.-based Thayer are keeping mum on the price tag attached to the Fairview Park Marriott transaction, but Devin Chen, managing director at JER, told CPE that the company definitely turned a profit on the deal.

Located approximately 10 miles west of the nation’s capital at 3111 Fairview Park Rd., the Fairview Park Marriott first opened its doors in 1989. In addition to its guestrooms, the 16-story hotel features 15,000 square feet of meeting space.

JER’s reasons for parting with the Fairview Park Marriott were twofold. “We had a business plan to renovate the hotel’s public spaces and we’d done that,” Chen said. “Also, in May 2009, we knew some of our lenders were having liquidity problems so we bought back part of the hotel’s debt at a substantial discount.”

The company also extended the maturity date on the remainder of the loan, he said. “So we had executed our business plan and reduced leverage and basis, so we felt like it was a good time to sell.”

JER didn’t have to look far for a buyer for the Fairview Park Marriott; actually, it didn’t have to look at all. While JER notes that the timing of the sale was right, the company had not been actively marketing the hotel. But that didn’t keep investors from making offers. “We had a lot of unsolicited interest in the property,” Chen said. “So many institutional investors are interested the DC hotel market. They find it attractive because of the federal movement’s presence, and there’s a positive long-term outlook for the market. We weren’t looking to sell, but Thayer approached us with pricing that we thought was very attractive.”

The firm is quite bullish on the Washington, DC-area market, but that is not to say that the company wouldn’t consider other dispositions, according to Chen. “We are always a seller at the right price–and we are always a buyer at the right price.”