JV acquires 20-hotel portfolio from Apple REIT for $211M

A joint venture between Flynn Properties Inc., owner of commercial real estate, luxury resorts and select-service hotel properties in America and abroad, and Värde Partners, a global alternative investment firm, has acquired 20 select-service hotels—11 Marriott- and nine Hilton-branded locations—in a $211-million deal with Apple Hospitality REIT.

The newly acquired properties, located throughout the Sun Belt, Northeast, Pacific Northwest and Midwest, will undergo capital improvements over time. Flynn Properties will serve as the managing member of the joint venture, charged with day-to-day asset management of the portfolio and execution of the business plan.

“We are excited to announce the addition of these Marriott- and Hilton-branded hotels to our portfolio of properties,” said Greg Flynn, founder/chairman/CEO, Flynn Properties. “This acquisition is part of a broader business strategy by Flynn Properties to increase its select-service hotel footprint, which proved to be one of the best performing sectors in the industry. We are also excited by the caliber of properties included in this deal, as both Marriott and Hilton are global hospitality icons known for hosting some of the world’s most loyal travelers for business and leisure while offering exceedingly robust guest loyalty programs, which we believe will be a key source of guest revenue and retention.”

Francisco Milone, head of real estate special situations, Värde Partners, added, “Värde is pleased to partner with an experienced sponsor in Flynn Properties to acquire a portfolio of well-positioned hospitality properties in attractive locations with compelling market supply/demand dynamics. These properties have fared well through the pandemic, demonstrating the healthy demand for select-service hotels and the strength of their brands. The hotel sector has experienced an unprecedented shock, with extreme levels of cash-flow disruption driving a significant demand for capital. As the sector begins to recover from the pandemic, we believe there will be opportunities to invest selectively in high quality assets that are well positioned to capitalize on the return of business and leisure travel.”

This acquisition will bring Flynn Properties’ select-service hotel portfolio to 26 properties, complementing the six existing Marriott-branded hotels it currently owns. Flynn Properties is a division of San Francisco-based Flynn Holdings, which has two principal businesses: real estate and restaurants. Flynn Properties’ prior hotel investments include six Marriott Courtyards as well as four super-luxury resorts: Esperanza in Los Cabos, Mexico; the Carneros Resort & Spa and Solage, both located in Napa, CA; and the Hotel Madeline in Telluride, CO. Its commercial investments consist primarily of tech-oriented office buildings on the West Coast totaling more than 3 million sq. ft. Its affiliate, Flynn Restaurant Group LP, is the largest franchise restaurant operator in the world and one of the 20 largest foodservice companies of any kind in the U.S., owning and operating 2,400 restaurants in 44 states generating $3.6 billion in sales and employing approximately 73,000 people.

Värde has more than 25 years of experience investing in real estate, including financing and owning hospitality properties. The firm completed the sale of a portfolio of eight European luxury hotels operating under The Dedica Anthology brand in September 2020.

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