BETHESDA, MD (May 6, 2015) – The Meridian Group announced today it has closed on the purchase of the Hyatt Regency Bethesda, with plans to reposition the hotel.
The Meridian Group, a real estate investment and development firm based in Bethesda, MD, agreed to buy the 390-room hotel from LNR Partners LLC, a special servicer. The purchase price was not disclosed.
“We are pleased with the acquisition of this premier asset at an ideal location in downtown Bethesda,” said Gary Block, managing director, who led the transaction for Meridian. “We believe there is substantial upside potential for us on this investment.”
The full-service upscale hotel is located at 7400 Wisconsin Ave. in the heart of Bethesda. The property sits atop the Bethesda Metro station, just seven miles from the Central Business District in Washington, DC.
The hotel is under a management agreement with Hyatt Hotels Corp. until December 31, at which point Meridian will have the option of rebranding the asset. Meridian has retained Highgate Hotels to manage the property after the expiration of the Hyatt management agreement. Highgate is a leading independent and fully integrated hospitality management company with more than 65 hotels and 22,000 rooms worldwide in its current portfolio. A sister company of Highgate is investing along with Meridian in the hotel.
“We are excited for the opportunity to do our first venture with Highgate,” Block said. “Highgate is well-known for its tremendous expertise in managing this type of asset.”
Meridian plans to fully reposition the hotel, with a scope to include lobby renovations; improvements to guestrooms and bathrooms; a complete replacement program for the hotel’s draperies, carpeting and linens; lobby and common corridor enhancements; and improvements to the hotel’s amenity package.
“We believe in this partnership with Meridian and look forward to working together to further enhance this outstanding asset,” said Mahmood Khimji, co-founder and principal of Highgate Hotels.
Meridian previously owned the hotel with several different partners from 1999 to 2010.
Meridian is acquiring the hotel through its discretionary real estate fund — Meridian Realty Partners II. It is one of the largest equity funds focused on real estate in the Washington metropolitan area.
“This was an opportunistic acquisition for us that aligns well with our investment strategy,” said David Cheek, president and co-founder of Meridian. “We look forward to substantially upgrading the hotel and making it the best hotel in Bethesda.”
The hotel is part of the Bethesda Metro Center complex, which also includes a 17-story Class A office building and a parking garage.
The hotel features 390 guest rooms, 20,000 square feet of meeting space, and two restaurants that are leased to third-party restaurant operators — Morton’s of Chicago and The Daily Grill. Additional amenities include a lounge, a heated indoor pool and whirlpool on the rooftop, an exercise room, a business center and a gift shop.
“We are confident that with the planned renovation, the hotel will return to peak performance and be at the top of its competitive set,” said Bruce Lane, executive vice president and co-founder of Meridian.
