Chesapeake Pays $42M for Hotel Adagio

(Mark Your Calendars: RealShare HOTELS 2011, September 15 in New York City).

SAN FRANCISCO-Chesapeake Lodging Trust has acquired the 171-room Hotel Adagio for $42.25 million, or approximately $247,000 per key. The company funded the acquisition with a borrowing under its revolving credit facility.

Chesapeake has assumed the existing management agreement with locally based Joie de Vivre Hospitality to continue operating the hotel as a full-service, upper upscale boutique property. “We will give the Hotel Adagio a new identity that draws upon its outstanding location in Union Square, the unique San Francisco culture and demand generators that surround this high-quality hotel,” says James Francis, Chesapeake’s president and CEO.

“We are excited to have acquired our second asset in the highly sought after San Francisco lodging market,” he adds. In December, the company purchased Le Meridien San Francisco, a 360-room hotel, for $143 million.

As GlobeSt.com previously reported, Chesapeake has closed on a $130-million three-year term loan secured by the 368-room Le Meridien San Francisco and the 360-room W Chicago - City Center located in Chicago. The loan was provided by Wells Fargo Bank NA, and subject to certain conditions, allows for two one-year extensions. The loan bears interest equal to LIBOR, plus 3.65%, subject to a LIBOR floor of 1%. Proceeds from the loan were used to prepay the company's previous $60-million term loan, repay outstanding borrowings under its revolving credit facility, and for general business purposes, including funding future acquisitions.

As for Hotel Adagio, its prominent Union Square area location and the firm’s planned full repositioning of the hotel, and the boutique operating expertise of Joie de Vivre, make it a tremendous opportunity and valuable addition to the company’s portfolio, says Francis.

Hotel Adagio, located at 550 Geary St., is a 16-story, historic hotel originally constructed in 1929. The hotel features large guestrooms that average more than 400 square feet, approximately 2,000 square feet of dedicated meeting space with catering capacity to expand to over 5,000 square feet, a large 24-hour fitness center and a 24-hour business center.

“We are excited about the repositioning plans for the property,” Francis says. “We will give the Hotel Adagio a new identity that draws upon its outstanding location in Union Square, the unique San Francisco culture and demand generators that surround this high-quality hotel.”

Chesapeake has been busy lately. In June, as GlobeSt.com reported, it acquired the 210-room Hotel Indigo San Diego Gaslamp Quarter located in San Diego for $55.5 million from InterContinental Hotels Group.