Host Marriott Corp. has purchased the debt on the 504-room New York Financial Center Marriott in New York for $101 million, the latest tactic in the Bethesda-based lodging company's expansion effort.
By controlling the mortgage on the 38-story downtown Manhattan hotel, Host Marriott is ultimately expected to assume complete control of the 5-year-old property.
"If they do things right, they should be able to acquire the property at an attractive price," said Mark Mutkoski, a BT Securities analyst in New York who tracks the lodging business.
The move by Host Marriott wouldn't be unprecedented. In November 1995, it acquired the 372-room Doubletree Hotel in Marina Del Rey, Calif., for $16.5 million, after assuming control of the hotel's mortgage.
"This is just another kind of buying opportunity," said Andrea Jacob, Host Marriott's director of investor relations. "This purchase represented a way for us to get to the property at a discount to the outstanding debt, with built-in equity."
The New York Financial Center loan, which was purchased from a bank, effectively gives Host Marriott a stake in four downtown New York hotels. Last year at this time, the company spent $141.5 million to acquire the 22-story, 820-room Vista Hotel in the World Trade Center complex. The four properties contain nearly 4,000 rooms.
In all, Host Marriott has spent $1.4 billion this year to acquire 22 projects. The company now controls 78 upscale hotels under the Marriott and Ritz-Carlton flags.
It is expected that Host Marriott will attempt to market the Vista and the Financial Center together, because they are about two blocks from each other.
"There's sufficient demand for hotel rooms downtown, so I can definitely see the advantages of marketing the Vista and the Marriott as a package," Mutkoski said.
Jacob declined to reveal the amount of the loan, citing a confidentiality agreement between the company and seller. She also would not provide room rates, average occupancy rates or the identity of the hotel's owner.
Pub Date: 12/10/96