REIT Chatham Lodging Trust has completed the previously announced acquisition of the 240-room Residence Inn San Diego Downtown-Gaslamp Quarter for $90 million, or approximately $375,000 per room. The hotel opened in 2009 and is within walking distance to the Petco Park and the Westfield Horton shopping complex.
“Having invested approximately $500 million into new hotel investments in 2014, our outlook on the industry remains bullish, and we expect to continue acquiring hotels in 2015 that meet our strict underwriting criteria,” said Jeffrey H. Fisher, CEO of Chatham Lodging Trust. “The Residence Inn is ideally located in the heart of the Gaslamp Quarter, just a block away from the San Diego Convention Center, one of the most popular convention markets in the country given San Diego’s beautiful year-round climate. This high-quality, downtown, infill hotel in one of the best lodging markets in the country is an ideal addition to our expanding presence in California.”
The hotel has 1,500 square feet of meeting space and offers the full range of Residence Inn amenities, including free breakfast and complimentary Wi-Fi. The property includes street-level retail space which presently incorporates two leased restaurants that cater to the pedestrian traffic within the popular Gaslamp Quarter. The property also includes a three-level, below-ground, 123-space structured parking garage. These varying sources of income were included in the $90 million purchase price and, including all income, Chatham estimates it acquired the property at a 7.6 percent capitalization rate on 2015 projected net operating income. The hotel represents Chatham’s second San Diego-area hotel, joining the Residence Inn San Diego Mission Valley.
Chatham funded the purchase with available cash from its $120 million share offering that was completed in January 2015. The Residence Inn San Diego Downtown-Gaslamp, previously managed by Marriott International, will be managed by Island Hospitality Management (IHM), which is 51 percent owned by Fisher.
Sajan Hansji, president of J Street Hospitality, stated, “The Residence Inn Gaslamp epitomizes our business strategy of developing and owning tremendously successful properties in unbeatable locations, and we are pleased to sell it to such a well respected owner as Chatham. It has been an important part of J Street’s portfolio, and we look forward to further developing new projects that are equally successful in robust destinations like the Gaslamp Quarter.”