66.5 F
San Diego
Wednesday, Mar 27, 2024
-Advertisement-

Hotelier Manchester Divests Remaining Interest in Marriott

Hotel owner and developer Doug Manchester has divested his remaining share in the 1,362-room San Diego Marriott Hotel & Marina , a hotel credited with contributing to the success of the San Diego Convention Center.

The recent transaction, Manchester said, was an exchange for shares in Bethesda, Md.-based Host Hotels & Resorts LP, a real estate investment trust.

Manchester declined to divulge the value of the deal. But according to a Securities and Exchange Commission filing, he assigned his 10 percent partnership interest in the Marriott Hotel & Marina to Host LP in exchange for 5.57 million “common partnership interests” or units amounting to a 1 percent interest in Host.

Each unit had a price of $16.68 on March 12, the day of the transaction, which totaled $93 million. As a result Host now owns 100 percent of the Marriott.

Host has 120 hotels in the United States and Europe, including the Sheraton Harbor Island and the Coronado Island Marriott Resort.

Manchester said he has been divesting portions of his partnership interest to Host over the past 15 years, but he declined to give details of those transactions. A call to Host was not returned.

Under terms of the deal, Manchester traded “other economic rights” , he’ll no longer receive 1.7 percent of the hotel sales.


Revenue Figures

Manchester Financial Group, which Manchester heads, does not release revenue figures. But he said the total value of the deal amounted to 25 percent of the equity value of the hotel. He said he did the deal “because I believe in Host.”

The SEC filing states holders of limited partnership interests may redeem their units for cash or they may redeem them for shares of common stock in Host.

The filing didn’t indicate how much time had to elapse between the acquisition and a sale or trade.

That time limit is confidential, said Dick Gibbons, vice chairman and chief executive officer of Manchester Financial.

Jon Cheigh, portfolio manager at REIT investor Cohen & Steers Inc. in New York, said REITs typically don’t limit when units can be sold or converted, but he also said he doesn’t think Manchester is looking to do either.

Selling would generate a capital gain that would be taxable, whereas trading real estate for an interest in a REIT is nontaxable, Cheigh said. “Once you try to sell (REIT) units for cash or change it to stock that’s taxable.”

“I don’t know if that’s the case, but that’s rational,” Cheigh said.

Manchester retains ownership of the 1,625-room Manchester Grand Hyatt, the city’s largest convention hotel.


Hotel Was Catalyst

The hospitality industry regards the 2.6 million-square-foot waterfront Convention Center as the catalyst that turned a sleepy Navy town into one of the nation’s top tourism destinations.

“You really have to credit Doug Manchester for being a visionary when it comes to the convention center and for building the hotels he has in downtown,” said lodging consultant Reint Reinders, formerly chief executive officer of the San Diego Convention & Visitors Bureau.

Aside from the Grand Hyatt, Manchester’s hotel portfolio includes the posh Grand Del Mar in the North County 25 miles from downtown and the boutique Whitetail Club & Resort in Idaho.

But he hasn’t thrown in the towel on downtown development.

He has a 99-year lease with the Navy to build a $1.2 billion complex, including a new military administration building, hotels, commercial offices and retail on 15 acres at the waterfront.

When the first 681-room tower of the Marriott was built in 1984 it carried the InterContinental flag.

When the second tower was added in 1987 the nameplate was changed to Marriott, and Manchester took on Host Marriott, now known as Host, as a 5 percent partner.

-Advertisement-

Featured Articles

Oberon Eyes Europe for Renewable DME

Leaders of Influence in Law 2024

-Advertisement-
-Advertisement-

Related Articles

-Advertisement-
-Advertisement-
-Advertisement-