Amazon Acquires Pentagon City Hotel for $148M, Setting Stage for Next Phase of HQ2
By Keith Loria September 23, 2020 9:33 am
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Acorn Development, a subsidiary of Amazon (AMZN), has acquired the Residence Inn by Marriott, a hotel in Pentagon City, Va., that sits on 1.5 acres of prime land, in a $148.5 million deal.
The Blackstone (BX) Group sold the property, which is located at 550 Army Navy Drive, according to public records.
Amazon plans to demolish the hotel and utilize the space as part of its second headquarters, according to the Washington Business Journal.
With the deal, Amazon now owns the entire 11.6-acre PenPlace, which comprises a square block bounded by Army Navy Drive, South Fern Street, 12th Street South and South Eads Street. The site was always part of Amazon’s HQ2 plans, but the hotel remained the last holdout, and it appeared the company would just build around it.
Amazon’s development partner, JBG Smith (JBGS) Properties, owns the majority of PenPlace, but Amazon has a deal in place to eventually buy the property once Arlington County approves a site plan.
“We are excited to be creating 25,000 jobs in Arlington, VA over the next decade, and as part of our plans to develop PenPlace—the second phase of our HQ2 campus,” a spokesperson for Amazon told Commercial Observer. “We look forward to presenting our design for PenPlace in 2021 and working to incorporate input from the local community.”
Amazon’s HQ2 is currently in the midst of its 2.1 million-square foot Phase 1, which consists of two 22-story office towers plus retail, and is situated to the south in Metropolitan Park, land that Amazon acquired earlier this year from JBG Smith for a little under $155 million. The project is projected to deliver by 2023.
Blackstone originally acquired the Residence Inn in July of 2019 for $99.1 million.
“This sale illustrates our ability to generate value for our investors by identifying attractive real estate assets in desirable locations,” Frank Cohen, BREIT’s chairman and CEO, said. “We are pleased with the portfolio we have built for our BREIT investors, which is concentrated in warehouses and rental housing, and we will continue to invest in assets where we have high conviction and selectively sell where we see compelling pricing.”
