LaSalle Hotel Properties to Sell Newport Asset for $77M
- Sep 12, 2014
LaSalle Hotel Properties has agreed to sell the luxury, 208-key Hotel Viking in Newport, R.I., for $77 million. The deal could close this week.
Neither the Bethesda, Md.-based REIT nor JLL’s Hotels & Hospitality team, which handled the transaction, disclosed the buyer’s name. However, the Providence Journal newspaper reported the buyer is Loan Star Global, a Dallas private equity fund.
LaSalle said it had paid $27 million for the hotel, located on Bellevue Avenue near Newport’s famous mansions, in June 1999.
“Hotel Viking was an excellent long-term investment for us,” Michael Barnello, president & CEO of LaSalle Hotel Properties, said in a statement. “Upon closing, the asset will have delivered an unleveraged IRR of 10.7 percent and an average cash-on-cash yield of 8.6 percent over 15 years.”
Proceeds of the sale will be used to reduce borrowings on the company’s senior unsecured credit facility. LaSalle is also executing a reverse 1031 exchange with Hotel Vitale, a 200-key hotel in San Francisco it bought in April for $130 million.
Managing Director Robert Webster and Executive Vice President Tim Southard led the JLL Hotels & Hospitality team on the transaction.
“Hotel Viking is an independent hotel located in the heart of the high-barrier-to-entry Newport market,” Webster said in a statement. “The property’s status as a premier leisure destination coupled with the overall resurgence of corporate group travel will continue to drive strong performance for the new investors.”
The four-story hotel was built in 1926. It has 14,000 square feet of meeting space, two food and beverage outlets, a spa, an indoor swimming pool and fitness center. The hotel is a short walk from Newport Harbor, restaurants, retail and other attractions.
It is the second hotel the REIT has sold this year. In June, LaSalle closed on the disposition of the Hilton Alexandria Old Town in Alexandria, Va., selling it for $93 million to an unidentified buyer. The REIT paid $59 million for it in May 2004.
Once the Newport deal closes, LaSalle will own 44 hotels. The properties are upscale, full-service hotels totaling more than 11,100 guest rooms in 13 markets in nine states and Washington, D.C. The company focuses on owning, redeveloping and repositioning upscale, full-service hotels in urban, resort and convention markets including New York City, Chicago, Boston, Philadelphia, San Diego and Indianapolis. The Hotel Vitale purchase was the sixth San Francisco asset for LaSalle.
“The U.S. hotel sector will record another year of strong growth in room demand and room revenue,” according to the Marcus & Millichap Hospitality Research national report for midyear 2014. “Greater business spending and leisure travel will underpin a 2.9 percent rise in room nights during 2014, topping last year’s gain of 2.2 percent.”
The Marcus & Millichap report credits the expanding economy as a major contributing factor to the improvement in the hospitality sector. The report stated GDP growth is expected in the 3 percent range this year.