PALM BEACH, FL—Hotel REIT Chatham Lodging Trust said late Tuesday afternoon it had closed on its biggest acquisitions to date: the previously announced acquisition of a 51-property, 6,848-key portfolio from Cerberus Capital Management. In two separate deals, Chatham entered a $958.5-million joint venture in which Northstar Realty Finance bought out Cerberus’ interest in 47 extended-stay and select-service hotels, while Chatham on its own paid $341.5 million for a quartet of Residence Inn by Marriott properties in Silicon Valley.
As reported by GlobeSt.com on May 9, Northstar and Chatham paired up on an 89.7/10.3 JV, with Chatham maintaining its minority interest in a portfolio concentrated mainly on the East and West coasts and mainly affiliated with Marriott or Hilton brands. Chatham and Cerberus paid $1.02 billion in October 2011 for the Innkeepers portfolio, at the time a 64-asset portfolio, in a deal that allowed Innkeepers USA Trust to exit Chapter 11 bankruptcy.
Chatham plans to redevelop and expand all four Silicon Valley Residence Inn hotels to increase the room count by 36% from the present total of 751 keys to 1,023. The 272-room expansion would include a new lobby and public spaces in each location, with an estimated cost totaling $59 million or $217,000 per additional room. Island Hospitality will continue managing the entire Innkeepers portfolio, as it did under the Chatham/Cerberus JV.
In its most recent quarterly earnings report, Chatham recorded a 7.8% year-over-year increase in RevPAR for the there months that ended March 31. At the time, president and CEO Jeffrey Fisher said the company expected 2014 to be “an active and prosperous year,” thanks to “solid operating fundamentals in our existing portfolio, strong gains to be recognized on the recapitalization of the Innkeepers joint venture and significant external growth attributable to the acquisition of four, great hotels in the heart of Silicon Valley.”
The company’s stated long-term goal, Fisher added, is “to build Chatham into the premier, select-service and upscale, extended-stay lodging REIT. We have successfully created significant, long-term value for our shareholders by making disciplined acquisitions at very attractive pricing. We believe there is still running room in this cycle and will continue to look for further opportunities to grow our hotel portfolio.”