RICHMOND, VA-BRE Select Hotels Corp., an affiliate of Blackstone Real Estate Partners VII, has agreed to acquire locally-based Apple REIT Six for $1.2 billion. The transaction costs include the assumption of the company's debt. BRE Select Hotels was formed specifically to make this acquisition.
Apple REIT Six is one of several funds established by the company. This particular fund was formed in 2004, according to a statement by Glade M. Knight, chairman and CEO, on the firm's website. "Since that we have reached our fundraising goal of $1 billion," he said. The REIT has built a portfolio of 66 hotels located in markets across 18 states with the capital. The Marriott and Hilton brands are part of the portfolio, Knight also said.
That the REIT is being snapped up by a private equity player comes as little surprise to industry watchers. The lodging investment market has been characterized by lower interest rates, revenues that are outpacing expense growth and below-average supply additions, according to a report on the sector by PKF Hospitality Research.
The report noted that institutional investors and private-equity funds are showing a bias toward full-service and resort hotels in the major markets, where profit growth has been the greatest. Apple REIT Six, though, has a mix of assets in its portfolio, including two full-service Marriott properties.
All together its 7,658-key portfolio is spread among upscale extended-stay, select-service and full-service hotel brands, including Marriott's Courtyard, Fairfield Inn, SpringHill Suites and TownePlace Suites brands in addition to Homewood Suites by Hilton, Hilton Garden Inn, Hampton Inn and Hampton Inn & Suites.
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