REITs continue to make transaction noise

Real estate investment trusts are as active on the sell side as they are on the buy side.

Chatham Lodging Trust, a REIT focused on investing in upscale extended-stay hotels and premium-branded, select-service hotels, just completed the previously announced acquisition of a 51-hotel, 6,848-room portfolio from a joint venture comprised of Cerberus Capital Management and Chatham in two separate transactions. The combined total purchase price was $1.3 billion, before capital expenditure reserves credited to the buyers of $39.7 million.

Chatham acquired four Residence Inns in Silicon Valley, comprising 751 rooms, as part of the sale of the 51-hotel portfolio for a net cash purchase price of $272.6 million, or approximately $363,000 per room. The transaction consists of the gross purchase price of $341.5 million less reserve credits of $15.1 million, resulting in a net purchase price of $326.4 million.

Word is Chatham is considering the redevelopment and expansion of all four of the hotels to increase the room count by 36 percent to a total of 1,023 rooms. The 272-room expansion would include a new lobby and public spaces in each location with an estimated aggregate cost of approximately $59.0 million, or approximately $217,000 per additional room.

Meanwhile, the remaining 47 hotels were purchased by a joint venture between NorthStar Realty Finance Corp, a commercial real estate investment and asset management company, and Chatham for a gross purchase price of $958.5 million, a net cash purchase price of $933.9 million after reserve credits, or $153,000 per room.

FREE DAILY NEWSLETTER

Like this story? Subscribe to IHIF!

The hospitality industry turns to IHIF International Hotel Investment News as the must-read source for investment and development coverage worldwide. Sign up today to get inside the deal with the latest transactions, openings, financing, and more delivered to your inbox and read on the go.

NorthStar acquired Cerberus' 89.7-percent interest in the prior joint venture, while Chatham retained its 10.3-percent interest.

In the past year, Chatham has been very active snatching up hotels. Prior to this deal, it made a record-setting buy in Washington, in Novembe purchasing the 213-room Bellevue Residence Inn for $71.8 million

Any plus-billion-dollar deal is big news, for sure. And while Chatham is busy buying, FelCor Lodging Trust is selling. The REIT has sold its 196-room Doubletree Suites Hotel-Dana Point and its 251-room Embassy Suites Hotel-BWI Airport for aggregate gross proceeds of $54.1 million.

And they may not be done. The company reports it is currently negotiating contracts or has agreed to sell four other hotels for aggregate proceeds of approximately $73 million. To date, FelCor has sold 28 non-strategic hotels for aggregate gross proceeds of $627 million.

 

Read more on

Suggested Articles

Thomas C. Morey will retain his role as general counsel on an interim basis until his successor is appointed.

This week has been about the economy and budget sector, the planet and whether the Reuben Brothers go clubbing a lot.

The budget hotel sector has seen its focus expand to look not only at price, but at design and concept, as guests have become more demanding.