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JW Marriott Santa Monica sells for $75M
Stockdale Capital buys 175-key hotel from Columbia Sussex, which was accused of misusing PPP funds
The J.W. Marriott Le Merigot hotel in Santa Monica sold to Stockdale Capital Partners for around $75 million, The Real Deal has learned.
Stockdale’s managing director for hospitality, Bill Doak, confirmed the sale but would not provide an exact dollar amount. The seller was Kentucky-based Columbia Sussex, which operates hotels across the country, and which was embroiled in a scandal over alleged misuse of federal Paycheck Protection Program last year.
Stockdale acquired the leasehold interest in the Le Merigot and did not seek financing, Doak said. The deal closed May 11. The California-based investment firm owns hotels in Scottsdale, Arizona, and medical and office space in California.
Columbia Sussex listed the hotel, at 1740 Ocean Avenue, earlier this year. Like hotel owners across the country, Columbia Sussex was slammed by the coronavirus. In late January, three of its hotels were in foreclosure and the firm had at least $1.3 billion in CMBS debt, Bloomberg reported. The firm did not respond to multiple requests for comment.
Westwood-based Stockdale is just the latest Los Angeles-based investment firm to hunt for hotel acquisitions in the pandemic. Bainbridge DXS and its management wing Torrey Pines Hotel Group, launched a $500 million fund earlier this year to buy up to 200 distressed properties.
Like other hotels hit hard by the pandemic, Columbia Sussex tapped federal funding through the government’s PPP loan program. But in October, eight Congress members — including three from the L.A. area — asked the Small Business Administration to investigate Columbia Sussex for allegedly misusing the funds. They contended Columbia Sussex accepted $63 million in PPP funding intended to keep workers employed, but ended up laying off thousands of people.
Before the pandemic, Le Merigot housekeeping staff had filed complaints with California, alleging the company withheld wages and failed to pay overtime, according to Unite Here, a labor union that represents around 50 workers at the hotel. The state is expecting to hold hearings on the complaints in the coming weeks.
Now that the hotel has a new owner, the union has higher hopes. Kurt Petersen, co-president of Unite Here Local 11, said he was excited to work with Stockdale, adding union members want “peace, not to continue the war.”