RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today announced that it acquired the 278-room Hilton Garden Inn San Francisco Oakland/Bay Bridge for a purchase price of $36.2 million, or approximately $130,000 per key. The purchase price represents a forward capitalization rate of approximately 9.4% on the hotel's projected 2013 net operating income. The Company’s purchase price is considerably lower than other recently traded hotels in the area and is at a significant discount to replacement cost.
“We are excited to enter the San Francisco Bay Area market, which has been one of the top performing markets in the country in terms of RevPAR growth. The Bay Area is highly recognized as a technology, financial, biotech and venture capitalist hub as well as a major tourist and convention destination,” commented Thomas J. Baltimore, Jr., President and Chief Executive Officer. “Including this acquisition, we have now completed three acquisitions totaling $182.7 million in key gateway markets over the last 30 days.”
Located in the City of Emeryville, the hotel benefits from strong corporate demand generated by more than 113.0 million square feet of office space in the East Bay/Oakland office market. Additionally, the hotel benefits from its proximity to the University of California Berkeley, a world renowned university and the third largest employer in the Bay Area.
The hotel’s unique location between San Francisco and Oakland allows it to capture demand driven by citywide groups in both cities and also provides travelers the option of two international airports. As a Hilton Garden Inn brand, the hotel benefits from demand generated by Hilton’s strong reservation system and guest loyalty program.
The acquisition was funded through cash available on the Company’s balance sheet. 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.