Representing the largest US direct
investment ever in the Republic of Armenia, the historic Hotel Armenia,
located in the republic’s capital, Yerevan, has opened as a 5-star, world-
class Marriott hotel following a multi-million dollar restoration. AK
Development, the Boston-based investor group of American and other
“Diaspora” Armenians, defied all odds to manage the privatization process,
luring critical investment dollars and instituting “best of” practices
previously unknown in this Caucasus-region nation, once a part of the
Soviet Union.The Armenia Marriott Hotel is the first project in Armenia to receive
funding through the Overseas Private Investment Corporation (OPIC), a US
government agency, and the International Finance Corporation (IFC), an arm
of the World Bank. OPIC is the senior lender for the project, extending an
$18 million loan; IFC is a $4.9 million equity partner. AK Development,
which paid $10.4 million for the hotel and attendant office and
development parcels, secured this funding for the $42 million project
following a more than two- year due diligence process. Hotel operator
Marriott International is a lending participant, with $1.3 million of
subordinated debt.

“The Armenia Marriott Hotel, Yerevan, will have a strong demonstration
effect and promote investor confidence in the wake of Armenia’s transition
to a market economy,” said Mr. Edward Nassim, Director of IFC’s Central
and Eastern Europe Department.

With Armenia’s independence in 1991, and its difficult transition in the
following decade away from obsolete, unproductive Soviet-era practices, a
group of Armenian Diaspora sought a permanent investment that would
stimulate their ethnic homeland’s emerging market economy and serve as a
model for future foreign investment there. Recognizing tourism as a
powerful engine for economic change, a hotel investment fit their
investment criteria.

In 1997, the Hotel Armenia was offered for sale through a privatization
tender offer process conducted by Merrill Lynch International with a key
stipulation that the winning bidder partner with an internationally
recognized hotel brand. AK Development was formed to acquire and restore
the hotel and was represented by East-West Financial Services of
Washington, D.C., a specialist in project financing in emerging markets
with extensive business dealings with Marriott International. Investors
closed on the property in August 1998, with additional financing secured
by early 2000 and renovations begun in 2001.

The Armenia Marriott Hotel is nearby historic attractions and boasts 225
guestrooms, approximately 14,000 sq. ft. of meeting space; five
restaurants; fitness center; retail shops; and modern services previously
unavailable to travelers to Armenia.

Armenia is located in the Caucasus region and bordered by Turkey, Iran,
Georgia and Azerbaijan.
——-