Chatham Lodging Trust Sells Two Western PA Hotels That ‘Had a Good Run’
The two non-core hotels located in small markets have a combined RevPAR of $65 and did not match the overall quality of the hotelier’s portfolio.
ALTOONA, PA—After acquiring the hotels almost nine years ago, West Palm Beach, FL-based Chatham Lodging Trust has sold the 105-room Courtyard by Marriott Altoona, as well as the 86-suite SpringHill Suites by Marriott in Washington, Pa. for approximately $10 million.
The two hotels were part of a four-hotel portfolio purchase in August 2010 that also included a Residence Inn by Marriott in White Plains, NY. Chatham did not identify the buyer of the two Western Pennsylvania hotels.
Jeffrey H. Fisher, Chatham’s CEO and president, says the Courtyard by Marriott Altoona, as well as the 86-suite SpringHill Suites by Marriott in Washington, PA “had a pretty good run for five years, but no longer meet our long-term investment strategy.”
He adds that the two non-core hotels located in small markets have a combined RevPAR of $65 and did not match the overall quality of the hotelier’s portfolio.
“Excluding the sold hotels, our comparable portfolio RevPAR increases to $135 from $133. Importantly, we do not have to invest over $4 million renovating these hotels. We will continue to opportunistically sell assets when we believe we can re-deploy those proceeds into high-quality hotel investments that earn higher yields in higher growth markets, thus enhancing our net asset value,” Fisher says.
Chatham sold the hotels at an approximate 6% net operating income capitalization rate (after an assumed annual capital reserve of 4% of total hotel revenues).
The company estimates that the hotels would have contributed approximately $1 million of EBITDA in 2019. Net proceeds from the sale will be utilized to reduce borrowings on Chatham’s unsecured credit facility.
Chatham Lodging owns interests in 135 hotels totaling 18,592 rooms/suites, comprised of 40 properties it wholly owns with an aggregate of 6,092 rooms/suites in 16 states and the District of Columbia. The firm also has a minority investment in two joint ventures that own 95 hotels with an aggregate of 12,500 rooms/suites.