SPRINGFIELD, VA–Chatham Lodging Trust has acquired the 219-suite Embassy Suites by Hilton here for $68 million, or $310,000 per suite. The hotel traded in an off-market transaction.

The West Palm Beach, FL-based REIT estimates the trade has a year one NOI cap rate of 7.5%. In addition, according to CEO Jeffrey H. Fisher, it generates approximately 10% RevPAR premium to its existing properties and needs no capex for several years.

Chatham funded the purchase through cash from its recently completed five-million share offering, which raised $109 million. With the Embassy Suites by Hilton acquisition, Chatham has invested 81% of the proceeds from the share offering.

The hotel opened in August 2013. Besides its all-suite rooms, the hotel also has 26 additional extended-stay suites with full kitchens. Chatham could also convert more suites to an extended-stay-suite format.

An extended-stay format would work well for the area, the REIT has concluded. It is less than two miles from Fort Belvoir and the National Geospatial-Intelligence Agency, Fisher said in a prepared statement. Also, the Transportation Security Administration recently announced the relocation of its headquarters to two miles from the hotel by August 2020, “which will further bolster employment and training in the area,” he said. There is also substantial corporate demand as Fairfax County has the second-largest concentration of technology jobs of any major US market, Fisher concluded.

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