Blackstone sells Texas resort for $800M

Nashville-based Ryman Hospitality bets big on Sun Belt lodging

Blackstone's Jonathan Gray and JW Marriott Hill Country

Blackstone’s Jonathan Gray and JW Marriott Hill Country (Blackstone, Marriott)

UPDATED 6/6/23 at 12:36 pm

Ryman Hospitality will buy the JW Marriott Hill Country Resort and Spa in San Antonio from Blackstone Real Estate Income Trust for $800 million.

Hospitality investors have been piling into the Hill Country, a picturesque stretch of Central Texas with a growing number of glamping outfits and vineyards. The JW Marriott Hill Country is one of a smaller crop of large, retreat-ready assets in the area.

Ryman made an unsolicited offer for the property, according to Nadeem Meghji, head of Blackstone’s American real estate group. Blackstone held the property for five years and will profit roughly $275 million, Meghji said. According to an investor presentation by Ryman, the deal has a 6.6 percent cap rate.  

The deal comes as Ryman, a real estate investment trust based in Nashville, looks to expand its Sun Belt holdings and double-down on travel outside of urban cores that have faced slowing growth or even reducing populations.

“We’re seeing and hearing more and more from meeting planners and organizations that they’re moving out of some of the more controversial and kind of socially challenged markets, places like, San Francisco, Portland, Chicago et cetera,” Mark Fioravanti, the firm’s CEO, said on a recent earnings call.

BREIT is also heavily invested in the region, with roughly 70 percent of its portfolio concentrated in Sun Belt markets.

The 1,002-key resort opened in 2010 and spans 640 acres. It is focused on group travel, which accounts for a little over half of nightly bookings, and includes 268,000 square feet of meeting and event space, a 26,000-square-foot spa, five restaurants and two golf courses. Ryman will continue to operate the hotel under the JW Marriott branding

Last year, when the hotel was 65 percent occupied, it posted $53 million in net operating income and $456.67 in total revenue per available room, according to an investor presentation.

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The deal, which works out to $798,000 per key, will be funded in part by Ryman’s recent offering of 3.5 million shares of common stock. However, the deal hasn’t yet closed — the companies said that will come in the second or third quarter of the year.

Ryman’s shares are up around 6 percent from their pre-pandemic peak, rallying by 20 percent in the past year. The REIT’s other properties include the Gaylord Texan in Grapevine, an 1,800-key resort. In an investor presentation, Ryman said the Hill Country resort will help diversify its portfolio, both by geography and brand. At present, all but 5 percent of its 10,400 rooms are part of its Gaylord Hotels brand.

BREIT has limited withdrawals for seven straight months, though COO Jonathan Gray said on a recent earnings call that he expects the bleeding to slow. “We think as the world reverts, as we work through the backlog of redemptions, we will see flows return,” Gray said at the time.

Blackstone recently closed a $30 billion global real estate fund, giving it $50 billion to deploy and in January, BREIT pulled in $4.5 billion from University of California.

San Antonio’s economy has long relied on tourism, and that reliance only figures to grow as the city invests in major renovations to its airport and aligns more closely with Austin, the state’s hub for politics and tech.

The Alamo City’s hotel occupancy rate reached a 17-year high of 68 percent last year, the highest among major Texan markets, according to a report from Marcus & Millichap. While the city has seen sustained demand, new supply has only moderately grown, with fewer than 600 new rooms in the pipeline at the start of this year.

UPDATE: This article previously said BREIT pulled in $4 billion, not $4.5 billion, from University of California, and attributed the deal’s cap rate to Meghji, when it actually came from Ryman’s investor presentation.

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