ARLINGTON, VA—The Bethesda, MD-based Host Hotels & Resorts has acquired the ground leases for the Key Bridge Marriott for $54 million. The hotel was part of the Host Hotels' portfolio as a land lease from the time the hotel was built. But for ten years, Host had been wanting gain full control of the hotel, CEO Ed Walter said during the REIT's earnings call last week (per a Fair Disclosure transcript).

We have spent off and on the last 10 years negotiating with the owners of the foundation that owned the property in an effort to try to get complete control of the property. So I guess I would say it was opportunistic in the sense that we finally had -- they were finally motivated to sell and we finally had the opportunity to buy. We had a right of first refusal, which is essentially what we exercised on. So it was sort of if we were going to buy it, we needed to do it now.

Now the REIT is evaluating what it wants to the do with well-positioned property. Located on the edge of Georgetown along the Potomac River, the views from the rooms are not surprisingly “spectacular”, as Walter said, “because you are looking right down the mall at all of the monuments.”

The REIT believes there is excess density associated with the site, Walter said. The options it is considering range from:

...a complete scrapping of the asset and a complete redevelopment of the entire parcel, which would involve for us probably selling off a number of those parcels to other parties. We are also potentially redeveloping a part of the hotel and then selling off portions of the hotel to third parties to develop either residential or office.

Host used some of the proceeds from the sale of five non-core hotels totaling $345 million to pay for a portion of the ground lease.

ARLINGTON, VA—The Bethesda, MD-based Host Hotels & Resorts has acquired the ground leases for the Key Bridge Marriott for $54 million. The hotel was part of the Host Hotels' portfolio as a land lease from the time the hotel was built. But for ten years, Host had been wanting gain full control of the hotel, CEO Ed Walter said during the REIT's earnings call last week (per a Fair Disclosure transcript).

We have spent off and on the last 10 years negotiating with the owners of the foundation that owned the property in an effort to try to get complete control of the property. So I guess I would say it was opportunistic in the sense that we finally had -- they were finally motivated to sell and we finally had the opportunity to buy. We had a right of first refusal, which is essentially what we exercised on. So it was sort of if we were going to buy it, we needed to do it now.

Now the REIT is evaluating what it wants to the do with well-positioned property. Located on the edge of Georgetown along the Potomac River, the views from the rooms are not surprisingly “spectacular”, as Walter said, “because you are looking right down the mall at all of the monuments.”