PALM BEACH, FL—Chatham Lodging Trust completed the previously announced acquisition of a 52-hotel, 6,976-room portfolio from Inland American. The combined total purchase price was approximately $1.1 billion, before deal costs and funding of escrows.
Chatham acquired four hotels as part of the sale of the 52-hotel portfolio for a purchase price of $106.7 million, or approximately $186,000 per room, before deal costs. The four hotels are: the 179-room Hilton Garden Inn Boston-Burlington; the 176-room Courtyard by Marriott Dallas (Addison), TX; the 120-room Residence Inn by Marriott Houston-West University; and the 100-room Courtyard by Marriott Houston-West University.
“These top-tier, branded hotels expand our presence in some of the country’s best hotel markets and match our strategy of targeting specific high-growth markets based on growing corporate demand tied to the technology, medical and oil and gas industries,” stated Jeffrey H. Fisher, Chatham’s CEO and president. “Given our confidence in the health of the hotel industry, we will continue to be net buyers of high-quality hotels.”
The remaining 48 upscale, extended-stay hotels and premium-branded, select-service hotels were purchased by a joint venture comprised of NorthStar Realty Finance Corp, a diversified commercial real estate company that is organized as a REIT, and Chatham for a purchase price of $964 million before deal costs and funding of escrows, or $151,000 per room. NorthStar owns a 90% ownership interest in the joint venture, and Chatham owns a 10% interest. Chatham acquired its 10% equity interest in the joint venture for approximately $28 million.
Chatham financed the investments with available cash and borrowings under its revolving credit facility of $69 million. In late September, Chatham issued 6.9 million common shares, generating net proceeds of approximately $144.6 million, which was used at the time to repay any borrowings outstanding on its revolving credit facility.
All four of the Chatham wholly owned hotels and 34 of the 48 hotels owned by the joint venture will be managed by Island Hospitality Management, a hotel management company that currently is 90% owned by Fisher.