RLJ Sells Luxury Boston Hotel for $170M
- Dec 19, 2017
RLJ Lodging Trust, of Bethesda, Md., has sold the historic 383-key Fairmont Copley Plaza in Boston for $170 million, or about $444,000 per key.
RLJ did not respond to Commercial Property Executive’s request for additional information. The buyer appears to have been Paris-based Accor Hotels, but CPE was unable to reach Accor to confirm this.
“We are pleased by the execution of the sale of this iconic asset at a very attractive valuation that is significantly accretive to our shareholders across a number of metrics. The disposition of this asset is consistent with our objectives of selling non-core assets,” Ross Bierkan, RLJ’s president & CEO, said in a prepared statement.
“Our ability to sell this asset shortly after closing the merger highlights the team’s focus on executing our key priorities in a disciplined manner,” he added. “We remain committed to our disposition strategy, and we look forward to announcing further asset sales as they materialize.”
The sale price reportedly represents an approximately 4.6 percent cap rate on the hotel’s 2017 projected NOI. RLJ noted that the hotel’s 2016 EBITDA margin was roughly half that of the company’s pro forma average in 2016.
RLJ stated that it intends to use the sale’s net proceeds for general corporate purposes, “with a focus on paying down debt.”
Completed in 1912, the hotel has a prime location that puts it near the Boston Public Library, Beacon Hill, Hynes Convention Center and Copley Place Mall. Its amenities include the OAK Long Bar + Kitchen and a complimentary on-site fitness facility, a 3,000-square-foot rooftop health club overlooking Back Bay.
The merger referenced by Bierkan was that between RLJ and FelCor Lodging Trust Inc., which was announced last April. The all-stock deal was valued at $1.2 billion.
A strong market getting stronger
RevPAR in the metro Boston lodging market has grown by 2.8 percent year-over-year, to about $212, as the city has benefited from strong convention business, limited supply growth (of only 1.6 percent over the same period) and increasing demand from both corporate and leisure travelers, according to an October report from Boston’s Pinnacle Advisory Group.
Both the downtown and Back Bay submarkets have seen occupancy increases of about two percentage points. Pinnacle projects that 2017 will see the overall market hit 82 percent occupancy, matching the highest occupancy on record, even as ADR grows.
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