Houston Galleria Marriott Sells For $13M Loss After Loan Default, Repossession
The Marriott West Loop by The Galleria lost about half of its value in five years and sold at a $13M loss late last year, according to newly released Trepp data and Harris County records.
The repossessed 14-story, 301-key hotel at 1750 West Loop S sold for $25.7M in late 2022, almost three years after its former owner — an entity identified by the Harris Central Appraisal District as Which West Loop Owner LLC — defaulted on a $29.1M loan, according to Trepp.
The lender, a commercial mortgage-backed securities vehicle controlled by J.P. Morgan Chase Commercial Mortgage Securities Trust, took ownership of the 165K SF property in June 2021, Trepp reports, selling the property at the end of last year for a loss of nearly 50%.
Trepp noted the sale as the largest U.S. CMBS loan loss in January.
1750 West Loop Partners, an LLC likely formed for the purchase of the hotel, is listed as the buyer of the property, according to property intelligence firm Reonomy. That could not be confirmed via Texas property records as the state is among a handful of nondisclosure states where the sales price of real property is not recorded and made available through public record.
Those listed as principals of 1750 West Loop LLC, which shares an address with Houston-based wireless company Verge Mobile, did not respond to a request for comment. Marriott's press team also did not respond to Bisnow requests for comment.
1750 West Loop Partners registered its business with the Texas Secretary of State in September 2022 and documents filed by JPMC Commercial Securities Trust with the Securities and Exchange Commission indicate the hotel was sold in August 2022 and closed that November.
The hotel sold for $3.4M less than the original loan, Trepp reported. That plus $9.5M in sales costs resulted in a $12.9M loss.
TreppWire reported in August 2020 that Which West Loop Owner out of Newport Beach, California, had last made a payment on the $29.1M loan in March 2020.
That default was “due to COVID19,” according to special servicer comments on an SEC filing from June 2021.
In 2019, the loan posted a debt service coverage ratio of 1.19x when occupancy was 61%, Trepp said. In 2021, DSCR fell to -0.65, meaning the hotel was bringing in less money than its loan payment.
The value of the hotel had fallen to $21M in March 2021, down from an appraised value at securitization of $51M in 2016, per Trepp.
The full-service Marriott was built in 1976 and renovated in 2006. The hotel features a 17K SF meeting space, the renovated 17Fifty Bistro & Lounge, an indoor pool, a business center and a fitness room, according to an SEC filing dated Jan. 10.
Marriott manages the hotel under an agreement that expires in September 2027, but Marriott will allow the buyer to convert the management agreement to a franchise agreement, the filing states.
