RLJ Lodging Trust has acquired the 170-room Moxy Denver Cherry Creek for a purchase price of $51.3 million, or approximately $301,000 per key. The company also completed the disposition of the 764-room DoubleTree Hotel Metropolitan New York City for gross proceeds of $169 million.
“We are pleased to acquire the recently built Moxy Cherry Creek Hotel, located within the heart of the exclusive Cherry Creek submarket of Denver, which is expected to generate outsized growth for years to come. In 2021, we successfully acquired three high-quality hotels in top growth markets for nearly $200 million, which will enhance our growth profile throughout this cycle,” said Leslie D. Hale, president and CEO. “Additionally, we completed the disposition of the DoubleTree Metropolitan at a highly accretive valuation. Overall, we successfully match funded three acquisitions with proceeds from non-core hotel dispositions, which were sold at a multiple that was more than 15 times greater than our acquisitions. We have entered 2022 with substantial investment capacity, which will allow us to continue to execute on both external and internal growth initiatives throughout the year.”
Moxy Denver Cherry Creek
The 170-room Moxy Cherry Creek opened in late 2017 and is expected to generate an estimated 8 percent to 8.5 percent stabilized net operating income yield and a stabilized revenue per available room premium of 15 percent to 20 percent relative to the company’s existing portfolio in 2019, with hotel earnings before interest, taxes, depreciation and amortization margins that are 600 to 800 basis points higher. The company has engaged Denver-based Sage Hospitality Group to manage the property.
RLJ funded the acquisition with the combination of corporate cash and the assumption of $25 million of non-recourse secured debt. The seller is BMC Investments, a Denver-based developer of commercial real estate throughout the United States.
The hotel is one of five hotels located within the Cherry Creek North neighborhood of Denver, with more than 100 retail shops and 50 restaurants within a four-block radius of the property. Amenities include the Moxy Bar and the Cherry Creek Beer Garden in addition to meeting rooms, outdoor event space, complimentary bike rentals and a fitness center.
Cherry Creek is seeing significant growth in office space, residential units and development of mixed-use projects. Hotels in the neighborhood typically generate an average daily rate premium above comparable hotels located in downtown Denver.
Denver hosted nearly 18 million overnight visitors in 2019 and is also an emerging meeting destination. Denver’s RevPAR grew 70 basis points ahead of the top 25 U.S. markets per STR from 2015 to 2019 on a compounded annual growth rate basis.
DoubleTree Hotel Metropolitan New York City
The company also recently closed on the previously announced disposition of the 764-room DoubleTree Metropolitan, for a gross sales price of $169 million, which represents a multiple of over 47 times this property’s 2019 hotel EBITDA.
Following this disposition, the company owns two hotels in New York City, representing approximately 550 rooms and less than 3.5 percent of the company’s pro forma 2019 hotel EBITDA.