Chatham/Cerberus JV looking to unload Inkeepers portfolio


Two-plus years after acquiring the Innkeepers portfolio, its owners, the Chatham Lodging Trust and Cerberus Capital Management joint venture, is now looking to sell it. Eastdil Secured is the advisor for the offering, which totals 51 hotels and 6,487 rooms. (The initial portfolio that the JV bought totaled 64 hotels, but 13 have since been sold over the course of the past two-plus years.)

The portfolio is being marketed as "a rare opportunity to own a highly-diversified portfolio of newly renovated hotels that are supported by superior locations, leading brands, strong property performance, substantial recent capital investment and compelling, long-term value enhancement opportunities."

The portfolio is being offered unencumbered by management contracts and has a $950-million interest-only loan in place with a floating interest rate of LIBOR + 4.8 percent that is assumable subject to certain conditions.

The portfolio benefits from $171 million in capital expenditures since 2007 or approximately $25,000 per room. Operating performance was reportedly strong in 2013 with estimated revenue per available room growth of 5.5 percent, a RevPAR penetration index of 129 and estimated EBITDA of approximately $101 million.

"Having owned or operated the portfolio for quite some time, we know these hotels very well, its results are very strong, and with industry experts projecting attractive growth in the future, we would expect the portfolio to continue to produce great results," said Jeffrey H. Fisher, Chatham's CEO. "The joint venture has already returned 92 percent of our original capital investment, so if a sale occurs, the potential value that may accrue to Chatham because of our promote interest could be meaningful."

In October 2011, bankrupt Innkeepers USA Trust agreed to sell 64 of its hotels to Cerberus Capital Management and Chatham Lodging Trust for $1.02 billion, ending a two-month dispute after the buyers called off an earlier deal at a higher price.

Innkeepers had sued Cerberus and Chatham in August over their decision to back out of a May 16 agreement to pay $1.12 billion for the hotels, including $700 million of debt.

The portfolio consists of midscale and upscale brands, including Residence Inn, Hampton and Westin. The hotels are spread throughout the U.S., with a large concentration in California.