Chesapeake Lodging Trust to Sell SoCal Hotel for $90M

The planned disposition of the Hyatt Centric Santa Barbara comes five years after the REIT acquired the 200-key destination for $61 million.
Hyatt Centric Santa Barbara, Santa Barbara, Calif.
Hyatt Centric Santa Barbara, Santa Barbara, Calif.

Five years after acquiring the Hyatt Centric Santa Barbara in Santa Barbara, Calif., Chesapeake Lodging Trust has inked a deal to sell the 200-key hotel for $90 million.

Located across from the beach at 1111 E. Cabrillo Blvd., Hyatt Centric consists of a 171-key main hotel built in the 1930s, and an additional 24 keys in the neighboring Santa Barbara House. Chesapeake acquired the asset from a Hyatt affiliate in June 2013 for $61 million, or $305,000 per key, compared to the agreed upon sale price of $450,000 per key. The pending transaction does not include the site’s villa building and related land parcel, which the REIT sold in 2016 to a separate buyer for $2.1 million.

Chesapeake plans to utilize proceeds from the disposition of Hyatt Centric to repay outstanding borrowings under its revolving credit facility. If all goes as anticipated, the sale transaction will reach completion within the next 60 days.

More to come—maybe

Chesapeake cites one reason for parting with Hyatt Centric: the premier property is located in what is a non-core market for the REIT. The company sold the 222-key The Hotel Minneapolis, Autograph Collection for $46 million in November 2017 for the same reason.  And there could be more such transactions in 2018.

“My general view is that it’s still a sellers’ market, and there are pockets of capital that are interested in different kinds of assets in different markets and different opportunities,” James Francis, president & CEO of Chesapeake Lodging Trust, said during the REIT’s first quarter 2018 earnings conference call on May 1. “So, I think if we think we can attract a bid on an asset that’s well inside of how our equity trades and we think a very attractive offer, I think you could see us prune a couple of hotels this year.”

Image courtesy of Hyatt