Goldman Said to Sell Hotels to REIT for $1.73 Billion

Goldman Sachs Group Inc. is selling almost 150 U.S. hotels acquired during the last decade’s property boom to a nontraded real estate investment trust for $1.73 billion, according to two people with knowledge of the deal.

Moody National REIT Inc. is buying 149 limited-service hotels from the bank’s Whitehall Street real estate unit, said the people, who asked not to be identified because the transaction is private. The portfolio is composed mostly of properties Whitehall purchased from the family of motel operator Gary Tharaldson for $1.2 billion in 2006, the people said.

Moody National disclosed the acquisition in a regulatory filing last week without naming the seller. The deal is the biggest for the Houston-based company since it started buying hotels four years ago, and will increase assets under management to about $2.5 billion, said Chief Executive Officer Brett Moody. Nontraded REITs such as Moody National aren’t listed on public exchanges and mostly raise money from individual investors.

“We still think there are several years left in the hotel cycle,” Moody said in a telephone interview. “The portfolio is poised to take advantage of increased demand with continued lack of supply.”

Andrea Raphael, a spokeswoman for Goldman Sachs, declined to comment on the transaction.

Debt Restructuring

Whitehall four years ago restructured debt on its select-service hotel portfolio, including the 130 properties in the Tharaldson deal, after a plunge in real estate prices from the 2007 peak. Since then, U.S. values have climbed to surpass the prior record, spurring a surge in transactions.

Whitehall hasn’t been active in taking equity stakes in buildings since the financial crisis. Its leveraged bets from the years preceding the 2008 real estate crash weighed on the firm as property values plummeted and credit dried up during the recession, pushing Whitehall to the sidelines.

The Moody National transaction includes hotels under brands such as Hampton Inn and Courtyard by Marriott. They are spread across 32 states, with a concentration in California, Arizona, Texas and the Northeast, according to CEO Moody. The REIT plans to invest about $280 million to renovate the properties, he said.