RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today announced that it acquired two focused-service hotels, the 226-room Courtyard New York Manhattan/Upper East Side and the 187-room Residence Inn by Marriott Bethesda Hotel Downtown, for a combined total of $146.5 Million.
“We were able to leverage our extensive network and strong industry relationships to source and execute accretive transactions in key gateway cities,” commented Thomas J. Baltimore, Jr., President and Chief Executive Officer. “We expect these two new additions to yield strong results and strengthen our overall portfolio.”
The Company acquired the Courtyard New York Manhattan/Upper East Side through a bankruptcy court-ordered sale for a purchase price of $82.0 million, or approximately $363,000 per key. The purchase price represents a forward capitalization rate of approximately 7.5% on the hotel’s projected 2013 net operating income. The Company’s purchase price is considerably lower than other recently traded hotels in Manhattan and is a significant discount to replacement cost.
Additionally, the Company was able to successfully leverage its strong industry relationships and acquire the Residence Inn by Marriott Bethesda Hotel Downtown in an off-market transaction for a purchase price of $64.5 million, or approximately $345,000 per key. The purchase price represents a forward capitalization rate of approximately 7.1% on the hotel’s projected 2013 net operating income.
The new additions to the Company’s portfolio are compliant with its overall investment strategy. The Company remains selective and disciplined in its pursuit to acquire accretive assets that drive shareholder value. These two focused-service hotels in key gateway markets exhibit high growth and high barriers-to-entry characteristics. Both hotels are well positioned to capitalize on Marriott’s strong reservation system and guest loyalty program as well as their proximity to upscale shopping, renowned medical centers, and other commercial and leisure demand generators.
The acquisitions were funded through a combination of cash available on the Company’s balance sheet and proceeds from its credit facility. An updated Pro forma RevPAR and Pro forma Consolidated Hotel EBITDA outlook will be provided in the Company’s upcoming second quarter earnings press release.