Cavalier Hotel resort sold to Connecticut firm

The Cavalier Resort at Virginia Beach’s Oceanfront’s previous owner — Cavalier Associates, led by Gold Key | PHR CEO Bruce Thompson — has sold the property to Connecticut-based real estate investment firm Wheelock Street Capital.

The sale closed on Monday, said a spokesperson with CBRE, the firm that brokered the deal. The deal includes The Historic Cavalier Hotel and Beach Club, as well as two other Oceanfront hotels that Gold Key | PHR developed. The Hunt Room restaurant and Tarnished Truth Distilling were not included in the sale.

The financial terms were not disclosed.

Thompson and his partners in Cavalier Associates purchased the Cavalier Hotel property in 2013 for $35.1 million, with plans to redevelop the hotel into a large-scale, mixed-use resort. The Y-shaped hotel, which first opened in 1927, hosted several U.S. presidents and a long list of luminaries, including F. Scott Fitzgerald, Frank Sinatra, Elizabeth Taylor, Ella Fitzgerald and Bob Hope.

Cavalier Associates restored the historic hotel and reopened it in 2018. The opening of the Marriott Virginia Beach Oceanfront Resort and Embassy Suites by Hilton Virginia Beach Oceanfront Resort followed, along with multiple restaurants, residences and the Cavalier Beach Club. The overall redevelopment cost was approximately $435 million.

In an email, Thompson said the terms of the transaction are confidential and pursuant to a nondisclosure agreement. He declined to address why the sale happened in the first place.

However, he said that the deal represents “the largest hotel transaction in Virginia history.” The property had received interest from numerous hospitality and investment groups.

“Wheelock distinguished itself through its track record of asset stewardship, financial strength and appreciation for the property’s unique history and community significance,” a Gold Key | PHR spokesperson said in an email. “Mr. Thompson was adamant that any future owner possesses both the passion and capability to maintain the property’s standards and continue the programming, events and community engagement that have become hallmarks of the Cavalier Resort. Wheelock shared that vision and demonstrated a commitment to preserving and enhancing the property’s legacy.”

The property will be managed by Connecticut-based HEI Hotels & Resorts.

Describing the hotels as “irreplaceable assets,” Wheelock Managing Director and Head of Hotel Acquisitions Timothy Hodes said in an email that part of the reason Wheelock was attracted to the property because Virginia Beach is “one of the fastest-growing and most dynamic resort markets in the United States.”

He said Wheelock will prioritize a “seamless transition” and maintaining a high-quality guest experience. While Hodes did not announce any plans for renovations or substantial changes, he said the company looks forward to hearing feedback from guests and exploring opportunities, large or small, to better enhance visitor experience at the hotels.

“Guests, Beach Club members, Virginia Beach residents and visitors should expect the experience they know and love to remain very much intact,” Hodes said. “Continuity is a top priority for us, and we are committed to honoring what makes this property special to so many people. Our goal is to build on the strong foundation already in place. We welcome feedback from guests, Beach Club members and the broader Virginia Beach community as we evaluate opportunities to improve the experience over time.”

He believes there is an opportunity to improve connectivity between the various hotels and create a more unified resort experience.

Completed in 2023, the Cavalier Resort comprises 547 guest rooms and suites, including 85 at The Historic Cavalier Hotel and Beach Club, 305 at the Marriott and 157 at the Embassy Suites by Hilton.

To support the renovation project, the Virginia Beach City Council and the city’s development authority approved $18 million in gap financing in 2014 and an additional $6.5 million in 2017, tied to the development of the Embassy Suites. The agreement requires the owner to make recurring payments equal to about 1% of the sales tax revenue generated by the property to help repay the project’s debt. The city and state also contribute matching amounts.

While it is not clear how much remains to be paid, Wheelock Street Capital and HEI will take over the gap financing agreement from Gold Key | PHR.