SAN DIEGO-Palm Beach, FL-based Chatham Lodging Trust, a hotel real estate investment trust focused on upscale extended-stay hotels and premium-branded select-service hotels, has signed a contract to acquire an upscale extended-stay hotel in north San Diego, in an all-cash transaction for $32 million. The property marks the 13th hotel either acquired or under contract to purchase by Chatham in the past four months since its April 21, 2010 initial public offering.
Completion of the hotel acquisition is subject to satisfactory completion of due diligence and other customary closing conditions, according to a company statement. Upon consummation of the transaction, the hotel will be managed by Island Hospitality Management, which is 90%-owned by Jeffrey Fisher, Chatham’s CEO.
Fisher points out that the property fits the REIT’s model of a “great location, in a market with multiple demand generators and superb visibility and accessibility.” He adds that “We believe that the San Diego market also has among the highest barriers to new competition in the country.”
This is the REIT’s first acquisition on the West Coast, says Fisher, and “Southern California is one of our key target markets,” he adds. “We expect to fund the acquisition with our anticipated $85 million senior secured credit facility.”
As GlobeSt.com previously reported, the company signed a commitment letter with a group of lenders for an $85-million senior secured-credit facility. The paper included an accordion feature that allows the company to increase the size of the facility to $110 million. It will mature in three years and the interest rate will be Libor plus 3.25% with a Libor floor of 1.25%. At the time, Fisher said that Chatham Lodging generally focuses on the Northeast and the mid-Atlantic states, as well as Southern California.
Fisher explains that this transaction, like many of our others, “is one that we sourced based on our long-standing relationships within the market,” he says. “It was not actively marketed, and we were able to acquire the hotel at what we believe is an attractive price.”
As GlobeSt.com previously reported, one of the company’s recent acquisitions includes the Hampton Inn & Suites Houston—Medical Center for $16.5 million in an all-cash transaction. The seller was local owner, Moody National Cos., according to the Harris County Appraisal District. The 120-room hotel acquisitionwas part of a four-property portfolio that Chatham agreed to buy for $61 million and was the first one to close. It marked the REIT’s seventh acquisition since its IPO in April 2010.
A Chatham source tells GlobeSt.com that because the hotel is under contract to purchase and the transaction is not complete, the current owner has required that the REIT not provide any additional information at this time.
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Natalie Dolce
Natalie Dolce, editor-in-chief of GlobeSt.com, is responsible for working with editorial staff, freelancers and senior management to help plan the overarching vision that encompasses GlobeSt.com, including short-term and long-term goals for the website, how content integrates through the company’s other product lines and the overall quality of content. Previously she served as national executive editor and editor of the West Coast region for GlobeSt.com and Real Estate Forum, and was responsible for coverage of news and information pertaining to that vital real estate region. Prior to moving out to the Southern California office, she was Northeast bureau chief, covering New York City for GlobeSt.com. Her background includes a stint at InStyle Magazine, and as managing editor with New York Press, an alternative weekly New York City paper. In her career, she has also covered a variety of beats for M magazine, Arthur Frommer's Budget Travel, FashionLedge.com, and Co-Ed magazine. Dolce has also freelanced for a number of publications, including MSNBC.com and Museums New York magazine.
