ANNAPOLIS, MD-Chesapeake Lodging Trust has completed its public offering of 12.5 million common shares, raising approximately $212.2 million in net proceeds. The REIT intends to use net proceeds to repay debt under its revolving credit facility for hotel investments and general business purposes.
Chesapeake announced the pricing last week, at $17.75 per share, and increased the size of the offering as well, from a previously announced 11.5 million shares. The underwriters have been granted a 30-day option to purchase up to an additional 1.8 million common shares at the public offering price.
The REIT has been on an investment spree lately and presumably the funding will be used, at least in part, to finance its latest acquisition: the 204-room Courtyard Washington Capitol Hill/Navy Yard for $68 million, or $333,000 per key. As part of the deal, Chesapeake assumed approximately $37.7 million of existing mortgage debt and says it plans to borrow under its revolving credit facility. Completion of that deal is expected in the second quarter of 2011.
Prior to that transaction in December 2010, Chesapeake purchased Le Meridien San Francisco, a 360-room hotel, for $143 million, or about $400,000 per room. In November 2010, the REIT entered into a definitive agreement to acquire the 195-room Homewood Suites by Hilton Seattle Convention Center for $53 million, or approximately $272,000 per key.
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