Cavalier Hotel, 2 other Virginia Beach hotels could be sold to Connecticut firm

The historic Cavalier Hotel in Virginia Beach, along with two other Oceanfront hotels developed by Gold Key | PHR, may soon be sold to a Connecticut real estate investment firm.

The Virginia Beach Development Authority on Tuesday unanimously recommended assigning a gap financing agreement for the three hotels — known collectively as the Cavalier Resort — from current owner Cavalier Associates, led by Gold Key | PHR CEO Bruce Thompson, to Wheelock Street Acquisitions, a limited liability company affiliated with Greenwich, Connecticut-based Wheelock Street Capital.

Virginia Beach Deputy City Manager Amanda Jarratt said Virginia administers what’s known as the Tourism Development Financing Program, which provides gap financing for new-to-market hotel projects.

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.

Under Cavalier Associates, the historic hotel was restored and reopened in 2018, and the opening of the Marriott Virginia Beach Oceanfront and Embassy Suites by Hilton followed, along with multiple restaurants, residences and the Cavalier Beach Club. The project cost $435 million, and to support the development, 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 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.

The authority board’s Tuesday vote recommends transferring this financing agreement to Wheelock as part of the property’s potential sale. City Council is expected to consider the matter at its next meeting on Tuesday, Jarratt said.

“But again, there’s no cost to the city,” she noted. “There’s no additional financial burden. This is simply transferring the assignment of the agreements related to this grant program from the current owner to the prospective new owner.”

Jarratt confirmed the potential sale would include the three hotels and the beach club.

It is not yet clear what is prompting the potential sale or the timeline for a possible acquisition. Neither Thompson nor Wheelock Street Capital immediately returned requests for comment.

City officials also did not immediately provide how much still needed to be paid off on the gap financing.

Completed in 2023, the Cavalier Resort includes 547 guest rooms and suites, including 85 at the historic Cavalier Hotel and Beach Club, 305 at the Marriott Virginia Beach Oceanfront Resort and 157 at the Embassy Suites by Hilton Virginia Beach Oceanfront Resort.

Based in Virginia Beach, the privately owned Gold Key | PHR has annual revenues exceeding $140 million and employs more than 2,400 people. The company also owns Hilton Norfolk The Main.