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JW Marriott Desert Ridge Resort & Spa, Phoenix, Arizona by Richard Johnson

The JW Marriott Desert Ridge Resort & Spa was initially conceived by Marriott International even though Marriott already had a strong presence in the Phoenix area with its Camelback and Mountain Shadows Resorts. Marriott planned the property on its own, and then approached CNL Hospitality in the first quarter of 2000 with the idea of coming up with an ownership strategy. CNL’s REIT division made an investment on its own, and the company also sponsored a partnership to fund the $300 million development. Marriott International also became an ownership entity.

The building of the 950-room resort reflects a deep commitment for all those involved. With 170,000 square feet of meeting space, the developers intended the mega-resort at being a major player nationally for meetings and convention business. The resort would face stiff competition in the local marketplace which included The Phoenician, Arizona Biltmore and Scottsdale Princess. Also opening within a month of the JW Marriott were the $180 million 750-room Westin Kierland Resort and the $125 million 500-room Sheraton Wild Horse Pass Resort. Two of the JW Marriott's ballrooms alone will make it stand out from the competition. One is 33,000 square feet, the other is 26,000: either of those are the largest in Arizona.

The JW Marriott Desert Ridge opened in Dec 2002 as the largest hotel in Arizona with 950 rooms (869 standard rooms and 81 suites) at a cost of $311 million. The hotel claimed 10 restaurants, two championship golf courses designed by Arnold Palmer and Nick Faldo, 8 tennis courts, and a 28,000 sq ft spa. The grounds include 267 palm trees, broad lawns and several ponds, not to forget the lazy river and three swimming pools including an Olympic sized pool.

At opening the fine dining outlet was Ristorante Tuscany headed by chef Dina S. Davies. Another major outlet was Blue Sage with Southwestern cuisine. Also Chef/Owner Roy Yamaguchi opened a branch of his Hawaiian-fusion themed restaurant Roy's. The 5-story atrium lobby has limestone pillars lined with alabaster light fixtures. Opening room rates started at $260 per night.

The Phoenix JW Marriott along with the 998-room JW Marriott Orlando, Grande Lakes and 582-room The Ritz-Carlton Orlando, Grande Lakes have been linked for well over a decade. They were formerly owned by CNL Hotels & Resorts of Orlando. In 2007, the team of Morgan Stanley Real Estate, California State Teachers and Florida State Board acquired CNL for $6.5 billion which included the three hotels. In 2011, the Morgan Stanley partnership defaulted and surrendered the properties to the holder of mezzanine debt — an investment group consisting of Paulson & Co. of New York (a 43% stake), Capital Trust of New York (42%) and Winthrop Realty of Boston (14%). In 2012 Blackstone took control of Capital Trust and assumed its interest. In 2015, Blackstone bought out Paulson & Co in a transaction that valued the three properties at $1.2 billion. It financed each resort separately with floating-rate loans, totaling $1 billion, from Deutsche, Barclays and J.P. Morgan. Some $722.4 million of those two debt packages was securitized in a single-borrower deal (BXHTL 2015-JWRZ).

In September 2019 Blackstone Group sold the 950-room JW Marriott Desert Ridge Resort & Spa in Phoenix for $602 million, or $633,684/room to a venture of Trinity Real Estate Investments and Elliott Management Corp. For comparison the Arizona Biltmore sold in 2018 for $403 million and in 2015 the Phoenician Resort sold for $400 million.

Sean Hehir, Managing Partner of Trinity, said the JW Marriott Desert Ridge was purchased at well below replacement cost. Trinity and Elliott intend to implement a multi-million dollar capital improvement plan to further enhance the Resort and unlock embedded value. In addition to guestroom renovations, planned improvements include upgrades to the Resort’s meeting spaces and ballrooms, water features, and food offerings. Trinity Investments is a private real estate investment firm. Recently Trinity acquired the Westin Maui Resort on Kaanapali Beach, Maui and divested itself from the Ritz-Carlton Kapalua, Maui, Hawaii and the Kahala Hotel in Honolulu. Hehir is a graduate of Cornell University with a Bachelor of Science degree in Hotel Administration and holds a Diploma in Hotel Administration from the Hotel Institute Montreux, Switzerland.

Paul Singer created the hedge fund firm Elliott Associates in January 1977. In 2019 Elliott Management acquired Barnes & Noble for around $683 million and in 2018 acquired the A.C. Milan the professional football club in Milan, Italy, Elliott Management Corporation specializes in distressed debt acquisitions.

According to legal documents The JW Marriott Desert Ridge generated $42 million of net operating income in 2018 with a 73% occupancy rate. Blackstone, during its ownership, spent about $37 million on renovations. Steve Hart was the opening General Manager and today continues as Area Vice President and General Manager.

Compiled by Dick Johnson, October, 2019

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