Chatham Lodging Trust is about to enter Pittsburgh city limits. The hotel REIT just inked a deal to acquire the Hyatt Place Pittsburgh/North Shore from its developer, a joint venture involving Continental Cos. and Rockridge Capital L.L.C. With the completion of the off-market, non-brokered relationship transaction, Chatham will have increased its presence in the greater Pittsburgh area by 178 guestrooms.
“We already own two hotels outside of Pittsburgh,” Dennis Craven, Chatham CFO, told Commercial Property Executive. “We like hotels that tie in with the energy sector, and Pittsburgh is benefiting from the energy-related business and companies that are locating offices close to the action.”
Hyatt Place first opened its doors in December 2010, welcoming guests ranging from Pittsburgh Pirates fans attending events at PNC Park next door to business travelers seeking proximity to downtown Pittsburgh, just across the river. “The energy-related growth, expanding Fortune 500 companies and the up-and-coming entertainment district, where the hotel is located, are all driving demand,” Craven added.
Chatham will rely on property-specific debt and borrowings under its secured revolving credit facility to finance the $40 million purchase of the hotel. And the REIT will keep management responsibilities in the family. Island Hospitality Management, which is 90 percent owned by Chatham president and CEO Jeffrey Fisher, will take on the duties. And the Hyatt brand is not new territory for the REIT. As Craven noted, “We own through our joint venture, five Hyatt House Hotels, so are familiar with the Hyatt reservation systems and have an excellent relationship with Hyatt.”
But it’s not all about the Hyatt flag; Chatham is maintaining brand diversity in its portfolio. Earlier this year, the REIT snapped up the new 112-room Hampton Inn Portland Downtown Waterfront Hotel in Portland, Maine, for $28 million, and shelled out nearly $35 million on the purchase of the 197-room Courtyard by Marriott Houston Medical Center Hotel in Houston.
“Chatham seeks premium-branded, select-service and extended-stay hotel segments in strong markets with multiple demand generators and high barriers to new competition,” Craven concluded. “We have a strong presence along both coasts, as well as in select markets like Pittsburgh, and our recently acquired hotel in Houston. We like markets that are influenced by energy or have a large medical presence.”
The Hyatt Place Pittsburgh acquisition is on schedule to close by June 17.