Partnership Buys W Hotel in Dallas, Keeps Marriott in 20-Year Deal
by: Candace Carlisle | CoStar News
The W Hotel in Dallas has a new owner with $21 million in upgrades in the works as the hotel brand tries to reinvigorate itself across the United States and Canada.
HN Capital and Dunhill Partners purchased the W Hotel, a 12-story, 252-room hotel at 2440 Victory Park Lane in Dallas, for an undisclosed sum from Estein USA. As part of the deal, the new owners signed a 20-year extension to keep the Marriott brand operating the 15-year-old lifestyle hotel.
Marriott is expected to pay the new owners back the $21 million in upgrades in exchange for the extension of the hotel management agreement.
"The building is fantastic," Dunhill Partners CEO Bill Hutchinson said in an interview. "The building is made of concrete and steel and is an iconic building. We will be upgrading the furniture, fixtures, wallpaper and carpet. We will also put two new restaurants in the hotel."
When the W hotel brand launched in 1998 in New York City, it ushered in a new flavor of hospitality for hip, luxury travelers. Marriott inherited the W brand as part of its 2016 acquisition of the Starwood hotels group and now the global hotel operator is seeking to return W to its former luster. Across the United States and Canada, owners of W hotels have already committed to $200 million in renovations, according to Marriott.
Dallas Deal
The W Hotel is the last remaining real estate owned by Estein USA in Victory Park, a 75-acre mixed-use development surrounding the American Airlines Center in Dallas. Estein USA financially backed and stabilized Victory Park during a pivotal stage of the neighborhood's development, which hit a speed bump during the last recession.
The deal comes months after Estein USA sold its retail and office buildings at the site.
Dunhill Partners' Hutchinson, who is a reality star on Lifetime Television's "Marrying Millions" television show, is the developer behind thenew Virgin Hotel in the Dallas Design District, which is expected to be open for business next month. Many of Hutchinson's usual group of investors were involved in the W Hotel deal but he declined to disclose names. The two hotels are about 1.1 miles away from each other.
"Nearly the same group of investors in the Virgin Hotel also put equity in this hotel," he said.
Hutchinson also declined to immediately name the two restaurant concepts he's gearing up to lease at the W Hotel, saying the groups have yet to sign lease commitments. One concept will backfill the former Ghostbar space totaling about 7,000 square feet on the 33rd floor of the hotel and condo tower. The other concept is expected to fill the restaurant space on the ground floor, where Cook Hall is located, in about 3,500 square feet of space.
By having the Virgin Hotel, operated by Virgin's in-house hotel brand, and the W Hotel, operated by Marriott, Hutchinson said the two lifestyle hotels will have the ability to play off each other when one hotel is busy or appeal to a similar millennial-type customer wanting a "cool venue," or a fun hotel. The Virgin Hotel is expected to open to the public on Saturday, Dec. 7.
Vipin Nambiar, founder and managing partner at HN Capital, an affiliate of Hunt Consolidated, which is part of the Hunt family directed by Ray Hunt, has been in the hotel business throughout his career, owning limited service hotels and operating hotels on behalf of the Hunt family. Previously, Nambiar was the managing director of Hunt Investment Group.
JLL marketed the hotel on behalf of Estein USA. The deal does not include the condominiums at The Residences at W Dallas, which are owned by various homeowners.
Estein USA, an Orlando, Florida-based real estate investment firm, has a sister company called US Treuhand GmbH, in Darmstadt, Germany. Lothar Estein, who runs the two companies, has been a real estate investor in Germany since 1974 and started invested in real estate in the United States in 1978.