Hersha Hospitality Trust Picks Up Philadelphia's Rittenhouse Hotel
- Mar 05, 2012
March 5, 2012
By Barbra Murray, Contributing Editor
The Rittenhouse Hotel in Philadelphia, the premier 111-room lodging destination on the city’s celebrated Rittenhouse Square, became Hersha Hospitality Trust’s first purchase of the year. For a sum of $42 million, the REIT acquired a condominium interest in the mixed-use tower that is home to the lodging destination.
Rittenhouse Development Corp., which developed the property in 1989, was the seller in the off-market transaction. In addition to the hotel, which also features 8,500 square feet of meeting and function space and an upscale restaurant, the transaction included a condo interest in the building’s 44,000 square feet of retail and office space, as well as a fee interest in the adjacent 300-space parking facility. The transaction valued the hotel segment at $23.9 million, including the anticipated $2.2 million that will be invested in the renovation of the guestrooms and public space. Rittenhouse was represented by services firm Jones Lang LaSalle Inc. in the transaction.
But the property offers more than luxury lodging accommodations and coveted commercial space. It also provides an upside: the potential for expansion. The hotel, already known for having the largest guestrooms in the city, can be reconfigured to add 15 more guestrooms.
The Rittenhouse’s AAA Five Diamond designation and its prime location in the bustling Center City area play a large role in the success of the property, which continues to hold the position of top performer in the Philadelphia hotel market. This year, the Rittenhouse is on track for an average RevPAR of $225 and 75 percent occupancy at an average daily rate of $300, as per the property’s asset performance and valuation.
Hersha’s purchase of the Rittenhouse follows its recent $95 million acquisition of the 263-room Courtyard Miami Beach Oceanfront Hotel and an adjacent beachfront land parcel, where the REIT plans to commence construction of a 93-room tower this year.