RLJ Lodging Trust has acquired two West Coast hotels: the 256-room Courtyard Portland City Center in Portland, Ore., and the 293-room Embassy Suites Irvine Orange County in Irvine, Calif., in an off-market transaction. The combined purchase price is $120 million, or approximately $219,000 per key. The purchase price represents a forward capitalization rate of approximately 7.4 percent on the hotels’ combined projected 2015 net operating income.
“This portfolio acquisition is another great example of our ability to source attractive, off-market opportunities,” commented Thomas J. Baltimore, Jr., president and CEO. “Both assets benefit from prime central locations, strong brand affiliations, and strong operating performance. With the acquisition of these two hotels, we continue to expand our West Coast presence and upgrade our portfolio’s overall quality.”
The Company remains selective and disciplined in its pursuit to acquire assets in markets that will create long-term shareholder value. The hotels' 2013 aggregate revenue per available room is greater than $116, which is approximately a 10-percent premium to RLJ’s reported 2013 RevPAR.
The Portland area’s diverse and growing economy has a broad base of technology, apparel, and advanced manufacturing companies. Intel, Nike, and Oregon Health & Science University, which are some of the area’s largest and most well-known demand generators, are all undergoing large-scale expansion in the area, RLJ said.
The city of Irvine is located in the center of southern California’s Orange County. Irvine has a diverse mix of high-density office, commercial, and residential properties, RLJ said.
"We expect that both hotels will continue to benefit from strong local market conditions and positive lodging fundamentals. In 2013, the Portland and Irvine markets both outperformed overall U.S. RevPAR growth, as reported by Smith Travel Research, and we expect both markets will continue to perform well and generate additional positive growth in 2014 and beyond," RLJ said.
The transaction was funded with cash available on the company’s balance sheet and its revolving credit facility. With the addition of these two hotels, the company now owns 148 properties, consisting of 146 hotels with approximately 23,000 rooms, and two planned hotel conversions located in 21 states and the District of Columbia.