SAVANNAH, GA-Chatham Lodging Trust, a Palm Beach, FL-based hotel REIT, reports it has purchased the 160-room SpringHill Suites by Marriott Savannah Downtown/Historic District for $39.8 million.

The purchase price represents a forward 12-month capitalization rate of approximately 8.5% based on the hotel's projected net operating income. Year-to-date through Sept. 30, 2013, the hotel's RevPAR is up nearly 6% to $113, Chatham officials state.

The SpringHill Suites is the newest hotel within Savannah's landmark waterfront Downtown/Historic District. Constructed under the strict guidelines of the Historic District's Preservation Plan and the Savannah Metropolitan Planning Commission.

“Despite the current competitive transaction climate in the lodging industry, we continue to source high quality acquisitions in off-market transactions through our extensive industry relationships,” states Jeffrey H. Fisher, Chatham's chief executive officer. “This hotel matches our strategy perfectly with its infill location, recent construction in 2009, high barriers to new competition and strong, growing demand. Similar to our downtown Portland, Maine Hampton Inn and Suites, demand at this hotel is consistently strong for leisure travelers year-round, due to its great location. The hotel also attracts the corporate traveler segment, which seeks a premium-branded hotel in a great location within the beautiful Historic District.”

The property sits directly across the street from the Savannah Civic Center.

The 160-suite hotel features solid concrete construction, an underground parking garage and a brick/stucco exterior. Amenities at the hotel include a heated outdoor pool, fitness center, 2,645 square feet of meeting space and valet parking.

“Since December 2012, we have significantly enhanced our portfolio's asset quality, acquiring seven hotels with an average age of less than four years in very desirable locations for approximately $260 million,” said Peter Willis, Chatham's chief investment officer. “These are top-quality assets with excellent operating fundamentals and significant upside potential. We have a very active and deep pipeline of prospective targets and intend to use capacity on our balance sheet to continue to acquire hotels that meet our strict underwriting criteria.”

Chatham funded the purchase with available cash and borrowings on its secured revolving credit facility. Following the acquisition, the company's leverage ratio is 37%, calculated as net debt to hotel investment at cost. Chatham currently has the capacity to make incremental acquisitions in the range of $150 million-$200 million on its balance sheet, the company reports.

Island Hospitality Management manages the SpringHill Suites by Marriott Savannah Downtown/Historic District, which is 90% owned by Fisher.