This Luxury Hotel REIT Is Shrinking Fast, and One Buyer Keeps Reappearing

Braemar Hotels & Resorts has sold the Pier House Resort & Spa in Key West to investment firm Sixth Street for $190 million, in a deal completed with Riller Capital. It is the second Braemar property Sixth Street has acquired in four months.

The 142-key oceanfront resort sits on five acres at the head of Duval Street, Key West's main thoroughfare, with two restaurants, a full-service spa, private beach frontage and roughly 3,000 square feet of meeting space. Sixth Street principal Aman Gupta described it as "a historic luxury resort in one of the country's most supply-constrained" leisure markets - a fair reading of an island where new hotel development is effectively capped.

A portfolio being taken apart

The sale is part of Braemar's shift to a self-managed REIT after ending a strategic review in June and moving to terminate its advisory agreement with Ashford Inc. The company has been selling steadily to cut debt: Park Hyatt Beaver Creek Resort and Spa went to Sixth Street for $176 million in May, and in July Braemar closed on The Ritz-Carlton, Sarasota along with two Yountville properties for a combined $437.5 million. The Marriott Seattle Waterfront sold for $145 million last year.

What is left is meant to be small and concentrated. Braemar has said it intends to hold six to eight luxury properties across the U.S. and the Caribbean, built around assets in markets where supply cannot easily grow.

That thesis is not unique to Braemar. The Florida Keys in particular has drawn capital for the same reason properties like Little Palm Island Resort & Spa command the rates they do: there is nowhere left to build.