Xenia Hotels & Resorts means business when it comes to purchasing hotels. In one swoop, the Orlando-based lodging arm for Inland American Real Estate Investment Trust, a non-traded REIT, has acquired the fee simple interests in three high-quality lifestyle boutique hotels and for no small change either—a whopping $245 million, according to Commercial Property Executive.
These assets are:
- The 84-key RiverPlace Hotel in downtown Portland, Ore.
- The 97-key Canary Hotel in downtown Santa Barbara, Calif.
- The 230-key Hotel Palomar in the heart of Philadelphia’s Center City District
All three lifestyle hotels will continue to be managed by Kimpton Hotels & Restaurants, which has managed both the RiverPlace Hotel and the Canary Hotel since 2012, and the Hotel Palomar since its opening.
“The acquisition of these distinctive hotels further exemplifies our strategy of continually enhancing our portfolio by investing in high-quality assets in major lodging markets and key leisure destinations,” said Marcel Verbaas, president & CEO of Xenia Hotels & Resorts in a prepared statement. “I am very pleased that we were able to execute on the opportunity to acquire three assets that are an excellent strategic fit, enhance our portfolio quality and are located in desirable lodging markets where we were not previously represented.”
The hotel company predicts that the new purchases will generate EBITDA of $7 to $8 million for the remainder of the year and $18.5 to $20.5 million next year. The three assets have shown strong operating results, as per the portfolio’s average RevPAR of $224.59, including an average occupancy 85.4 percent and an average daily rate of $262.93, during the 12 moths ending June 30, 2015.
The RiverPlace Hotel has been recently renovated and features the Three Degrees Waterfront Bar & Grill. Aside form the 84 guestrooms, it holds 36 expansive suites and 10 riverfront one- and two- bedroom condominiums.
The Canary Hotel opened in 2005 and is a leading boutique lifestyle hotel in Santa Barbara, being the tallest and sole full-service hotel downtown, which offers 360-degree views of the Santa Ynez Mountains and the Pacific Ocean from the rooftop terrace or pool.
The Hotel Palomar underwent an adaptive reuse in 2009 from a former historic office building. The 233 keys include 36 suites and the hotel is located near Philadelphia’s high-end Walnut Street shopping, dining and entertainment.
According to Marcus & Millichap’s Midyear 2015 Hospitality Market Report, the U.S. hotel sector gained momentum in the first quarter and is decidedly tracking another year of superior performance. Poor weather in cold-weather cities appeared to have little effect on travel and hotel booking patterns, enabling U.S. hotels to post gains in primary performance measures during the first quarter that topped last year’s performance. An increase in room demand will offset additions to hotel stock, raising U.S. annual occupancy to 65.2 percent in 2015 and exceeding the prior record of 64.8 percent set 20 years ago.