Brookfield Finalizes Watermark Lodging Trust REIT Acquisition in Cash for $3.8B

Watermark Lodging Trust

Brookfield managed private real estate trusts are set to acquire the publicly registered non-traded real estate investment trust (REIT), Watermark Lodging Trust, Inc. It will be an all-cash transaction and the price agreed is $3.8 billion, taking into account the assumption of debt as well as preferred equity.

Unfortunately, many Watermark REIT investors will receive substantially less than their initial investment. We are getting calls from investors alleging their financial advisor never disclosed the risk or liquidity issues of the non-traded REIT.

As result, Haselkorn & Thibaut, P.A., has opened an investigation into the sales practices involving Watermark Lodging Trust REIT and other non-traded REITs. Investors are encouraged to call for a free private consultation at 1-800-856-3352.

More about Brookfield

With an estimated $700 billion in assets under management (AUM), across sectors like renewable power, real estate, private equity, credit and infrastructure, Brookfield is a known manager of global alternative assets.

In a development late last year, it had taken over as adviser to Oaktree Real Estate Income Trust Inc. (OREIT), another non-traded REIT. One of the development outcomes was that in November 2021, the name of O REIT had been changed to Brookfield Real Estate Income Trust.

More about Watermark Lodging Trust

An April 2020 merger of Carey Watermark Investors 1 and Carey Watermark Investors 2, both non-traded REITs, had resulted in the creation of the Watermark Lodging Trust. Both the pre-merger entities had been advised by W. P. Carey.

In March 2022, the DI Wire had reported the real estate portfolio of Watermark had a market value of around $3.56 billion on the 31st of December, 2021, which was a 1.5% increment over the original purchase price which had been paid either Carey Watermark Investors 1 or Carey Watermark Investors 2, other than post-acquisition capital investments. Other assets came in at $258.5 million, while the mortgage debt of the REIT was valued at around $1.96 billion.

186.9 million Class A and 61.1 million Class T outstanding shares were held by Watermark Lodging Trust. A NAV of $1.56 billion had been reported by the Watermark Lodging Trust on the 31st of December, 2021.

25 upscale properties across 14 states with a room count of over 8,100 constitute the portfolio of Watermark, with a significant presence in the Sun Belt region.

The Deal

All outstanding shares of Watermark will be purchased by Brookfield, Class A shares for $6.768 per share, and Class T for $6.699 per share. Compared to the last published net asset value on 31st December 2021, of $6.29 per share of Class A and $6.22 per share of Class T, the agreed purchase price represents a premium of 7.5%.

The Watermark Board has blessed the deal with its unanimous approval. Pursuant to shareholder approval, it is expected to be consummated by the fourth quarter of 2022.

Michael Medzigian, chairman and chief executive officer of Watermark, echoed the Board’s sentiments and said, “We are very pleased to reach this agreement with Brookfield, as it achieves our longer-term objective of a liquidity event while providing our stockholders with an immediate and certain cash value. The transaction’s premium to our most recently published net asset values per share represents the strong execution of our entire team who have demonstrated the ability to find innovative solutions to address the challenges brought on by the COVID-19 pandemic…”

Managing partner and chief investment officer in Brookfield’s real estate group, Lowell Baron, said, “Hotels and resorts of this scale and quality are difficult to replicate. This portfolio is well-positioned given its concentration in high barrier to entry coastal destinations, gateway cities and the Sun Belt.”


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