Los Angeles — JRK Property Holdings has acquired a five-property Marriott hotel portfolio in Austin, Texas, from an affiliate of RLJ Lodging Trust—the debut acquisition originated by the firm’s inaugural $350 million hospitality fund.
The $65 million, all-cash purchase also marks the first multi-property hotel deal the Los Angeles-based real estate investment firm has made in the hospitality arena; JRK is known for its $6 billion in multifamily holdings and several successful syndicated hotel transactions.
JRK’s $350 million Hospitality Fund—it’s seventh fund overall and first dedicated hotel fund—will focus on full- and select-service hotels for value-add and core-plus investments in the nation’s top 25 markets. The fund targets transactions of more than $25 million and up to as large as $3 billion for portfolios, which would be made through its fully discretionary fund comprised of high-net-worth individuals or through joint ventures with strategic partners.
The Marriott Austin portfolio totals a combined 602 rooms across five premium-branded hotels—including a Marriott, Courtyard, Residence Inn, SpringHill Suites, and Fairfield Inn & Suites—located on one contiguous lot in South Austin. The hotels are situated along Interstate 35—less than a 10-minute drive from both downtown Austin and the Austin-Bergstrom International Airport.
JRK will be investing more than $40,000 per key on strategic capital improvements for the hotels, which originally opened between 1996 and 2001. Renovations will include complete room and common area upgrades as well as an enhanced food and beverage program across the portfolio.
“Given the success we’ve had with syndicated hotel deals throughout the past decade, there was a growing interest from our investors to start a dedicated platform for hospitality-specific ventures,” said Matt Lippman, executive vice president of JRK Investors, the real estate investment arm of JRK Property Holdings. “The ability to buy a primely located portfolio of Marriott-branded assets in Austin with a significant value add component was one we could not pass up and is an example of the type of high-yield opportunities we will continue to seek on behalf of our investors.”
Austin is one of the fastest-growing areas in the nation and has become a hub for high-tech companies, including Oracle, Facebook, and IBM, which maintain a sizable and growing employee base. The state capital also hosts internationally-known annual concerts and events, including South by Southwest (SXSW) and the Austin City Limits music festival (ACL), drawing a consistent flow of visitors throughout the year.
JLL handled the transaction on behalf of the seller, while JRK was self-represented.