RLJ Lodging Trust Picks Up 10-Hotel Portfolio from Hyatt Affiliates for $313M

RLJ Lodging Trust and affiliates of Hyatt Hotels Corp. have entered into a definitive agreement for RLJ to acquire a portfolio of 10 Hyatt, Hyatt Place and Hyatt House hotels totaling 1,560 keys for $313 million.

HYATT

RLJ Lodging Trust, of Bethesda, Md., and affiliates of Hyatt Hotels Corp. have entered into a definitive agreement for RLJ to acquire for about $313 million a portfolio of 10 Hyatt, Hyatt Place and Hyatt House hotels totaling 1,560 rooms, the parties announced Thursday. The transaction is expected to be completed next month.

A Hyatt affiliate will continue to manage the hotels, which are mostly on the West Coast, under new management agreements. RLJ intends to invest about $25 million in capital expenditures, most of it over the next 24 months, across the Hyatt portfolio.

RLJ expects to fund the acquisition through a combination of various financial resources, including cash on hand, its undrawn revolving credit facility and debt financing.

The hotels in the portfolio are:

Hyatt House Cypress/Anaheim; Cypress, Calif.; 142 keys

Hyatt House Emeryville/SF Bay Area; Emeryville, Calif.; 234 keys

Hyatt Place Fremont/Silicon Valley; Fremont, Calif.; 151 keys

Hyatt House San Diego/Sorrento Mesa, San Diego, 193 keys

Hyatt House San Jose/Silicon Valley; San Jose, Calif.; 164 keys

Hyatt House San Ramon; San Ramon, Calif.; 142 keys

Hyatt House Santa Clara; Santa Clara, Calif.; 150 keys

Hyatt Market Street, The Woodlands; The Woodlands, Texas; keys

Hyatt House Charlotte/Center City; Charlotte, N.C.; 163 keys

Hyatt Place Madison/Downtown; Madison, Wis.; 151 keys

Once this acquisition is completed, Thomas Baltimore, RLJ’s president/CEO, said in a release, “we will have acquired almost $900 million of assets since our IPO. This deal will be immediately accretive to the portfolio and will reinforce our stated goal of becoming the aggregator in this segment.”

“This transaction demonstrates the value from asset recycling. We were able to successfully convert hotels in key markets to Hyatt brands and sell these hotels to a high-quality owner while maintaining long-term presence in key markets,” Steve Haggerty, Global Head, Real Estate and Capital Strategy for Hyatt, said in the release.

With the addition of this portfolio, the majority of which was acquired by Hyatt in 2011, RLJ will more than double its hotel EBITDA on the West Coast. RLJ estimates that the portfolio’s 2013 aggregate RevPAR will be greater than $120, which is more than a 10 percent premium to RLJ’s projected RevPAR for 2013.

The addition of the Hyatt portfolio will bring RLJ to 158 hotels, totaling about 24,000 keys, in 24 states and the District of Columbia.

Hotel transactions last year totaled about $26.1 billion, or about 28 percent higher than in 2012, according to The Big Picture, a 2013 year-in-review report published last month by Real Capital Analytics.

“The hotel sector led all other property types in terms of volume gains and was also a leader in terms of price appreciation,” the report stated. The recovery was reportedly also broadly based, extending to limited-service properties and to secondary and tertiary locations.