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oTHERLY Hotels Inc.
(NASDAQ: SOHO) (the “Company”)
today announced that the Company has acquired the entity which owns the Crowne Plaza Houston Downtown Hotel (the “Hotel”) for $30.65 million in cash and 32,929 units of limited partnership interests in Sotherly Hotels LP, plus an additional cash amount for the Hotel’s working capital as of the closing date. The 259-room, upscale, full-service hotel is located in downtown Houston, Texas. The property will be managed by Chesapeake Hospitality.
Crowne Plaza Houston Downtown Hotel (Photo: Business Wire)
As a part of the transaction, the Company closed on a $21.5 million loan with Mutual of Omaha Bank collateralized by a first mortgage on the Hotel. The loan carries a fixed interest rate of 4.50% and amortizes on a 25-year schedule. The balance of the cash portion of the purchase price was funded by the Company with available cash.
Drew Sims, Chief Executive Officer of the Company, commented, “We’re pleased to acquire the Crowne Plaza Houston Downtown. Houston is the largest MSA in the Southern United States and is one of the top performing hotel markets in the country with a healthy economy and tremendous growth prospects.” Sims added, “Our predecessor company was involved in the redevelopment of this hotel over a decade ago and we have always hoped to be able to transfer it into the REIT. We believe the Houston asset will be immediately accretive to the Company’s earnings.”
For year-end 2013, the Company currently forecasts that the Hotel will operate at approximately 72.0 percent occupancy, with an average daily rate (“ADR”) of approximately $134.50, room revenue per available room (“RevPAR”) of approximately $96.80, hotel earnings before interest, taxes, depreciation, and amortization (“Hotel EBITDA”) of approximately $3.2 million, and net operating income after capital reserves (“NOI”) of $2.7 million.