PALM BEACH, FL—Hotel REIT Chatham Lodging Trustsaid late Tuesday afternoon it had closed on its biggestacquisitions to date: the previously announced acquisition of a51-property, 6,848-key portfolio from Cerberus CapitalManagement. In two separate deals, Chatham entered a$958.5-million joint venture in which Northstar RealtyFinance bought out Cerberus' interest in 47 extended-stayand select-service hotels, while Chatham on its own paid $341.5million for a quartet of Residence Inn by Marriott properties inSilicon Valley.


As reported by on May 9, Northstar and Chathampaired up on an 89.7/10.3 JV, with Chatham maintaining itsminority interest in a portfolio concentrated mainly on the Eastand West coasts and mainly affiliated with Marriott or Hiltonbrands. Chatham and Cerberus paid $1.02 billion in October 2011 forthe Innkeepers portfolio, at the time a 64-assetportfolio, in a deal that allowed Innkeepers USA Trust to exitChapter 11 bankruptcy.


Chatham plans to redevelop and expand all four Silicon ValleyResidence Inn hotels to increase the room count by 36% from thepresent total of 751 keys to 1,023. The 272-room expansion wouldinclude a new lobby and public spaces in each location, with anestimated cost totaling $59 million or $217,000 per additionalroom. Island Hospitality will continue managingthe entire Innkeepers portfolio, as it did under theChatham/Cerberus JV.


In its most recent quarterly earnings report, Chatham recorded a7.8% year-over-year increase in RevPAR for the there months thatended March 31. At the time, president and CEO JeffreyFisher said the company expected 2014 to be “an active andprosperous year,” thanks to “solid operating fundamentals in ourexisting portfolio, strong gains to be recognized on therecapitalization of the Innkeepers joint venture and significantexternal growth attributable to the acquisition of four, greathotels in the heart of Silicon Valley.”


The company's stated long-term goal, Fisher added, is “to buildChatham into the premier, select-service and upscale, extended-staylodging REIT. We have successfully created significant, long-termvalue for our shareholders by making disciplined acquisitions atvery attractive pricing. We believe there is still running room inthis cycle and will continue to look for further opportunities togrow our hotel portfolio.”

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Paul Bubny

Paul Bubny is managing editor of Real Estate Forum and He has been reporting on business since 1988 and on commercial real estate since 2007. He is based at ALM Real Estate Media Group's offices in New York City.