Brookfield Real Estate to Buy Watermark Lodging in $3.8 Billion Deal

Real estate investment firm Watermark Lodging Trust, Inc. has announced a definitive agreement with Brookfield Real Estate Funds, which will acquire the high-end hospitality portfolio in an all-cash $3.8 billion deal.

Brookfield will acquire all of the outstanding shares of Watermark common stock for $6.768 per Class A share and $6.699 per Class T share, including the assumption of debt and preferred equity. The purchase price represents a premium of over 7.5% from the most recently published Net Asset Values per share as of December 31, 2021.

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The Watermark hotel portfolio includes 25 luxury properties and more than 8,100 rooms, amassed over nearly 15 years of investing and intensive asset management. These properties are located in drive-to leisure destinations and gateway urban cities in 14 states, many in the Sun Belt.

“We are very pleased to reach this agreement with Brookfield, as it achieves our longer-term objective of a liquidity event, while providing our stockholders with an immediate and certain cash value,” Watermark Chairman and Chief Executive Officer Michael Medzigian told Hospitality Net. “The transaction’s premium to our most recently published Net Asset Values per share represents the strong execution of our entire team who have demonstrated the ability to find innovative solutions to address the challenges brought on by the COVID-19 pandemic.”

Watermark’s niche in the high-end market and its concentration in the south made it an attractive proposition. “Hotels and resorts of this scale and quality are difficult to replicate,” said Lowell Baron, Managing Partner and Chief Investment Officer in Brookfield’s Real Estate Group.

The Watermark Board of Directors has unanimously approved the transaction, which is expected to close in the fourth quarter of 2022.