ANNAPOLIS—Locally-based Chesapeake Lodging Trust may be looking to join the crowd -- the crowd of REITs, that is, that have been taken private over the past several months as their valuations drop. A report in The Wall Street Journal, albeit short on details, cites unnamed sources that claim the company is exploring the possibility of a sale.
REIT stocks in general have been under pressure for the last year in large part due to fears -- exaggerated and misplaced some but not analysts will say -- about interest rate increases. The result has been a pronounced gap in valuations between public and private real estate, despite the still solid fundamentals in the sector.
This week alone there has been three public-to-private REIT transaction closings – and that is despite Winter Storm Jonas interrupting East Coast operations for a day or three: Blackstone closed on the $8-billion acquisition of BioMed Realty Trust; Starwood Capital Group closed on its purchase of 23,000 apartments from Equity Residential as well as of its acquisition of Landmark Apartment Trust in partnership with Milestone Apartment REIT.
Also this week another report, this time from Reuters, emerged that Brookfield Asset Management has been exploring an acquisition of General Growth Properties. That report also cited unnamed sources but Brookfield is clearly in REIT acquisition as it recently made a $17 per share offer for Rouse Properties.
If the current US hotel cycle is indeed peaking, as some argue, one can see why hotel REIT Chesapeake Lodging might be looking for an exit strategy.
Indeed, it hasn't made any acquisitions since last May when it purchased the Ace Hotel and the Theatre at Ace Hotel in Downtown Los Angeles for $103 million, or $566,000 per door.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
