PHILADELPHIA, PA—Bethesda, MD-based RLJ Lodging Trust has sold the 364-room Sheraton Philadelphia Society Hill in Philadelphia, PA for $95.5 million or approximately $262,000 per key to The Buccini/Pollin Group, a Wilmington, DE-based real estate acquisition, development, and management firm. BPG says PM Hotel Group, a hotel management company based in Washington, DC, will manage the hotel.
“The Sheraton Society Hill is a remarkable asset in an unmatched location surrounded by numerous business and leisure demand generators, from the Liberty Bell and Independence Hall to Fortune 500 companies like Comcast and Aramark,” says Dave Pollin, co-founder, BPG. “We are in the advanced planning stages of a complete makeover of the hotel to upgrade the guest experience. In addition to improving both guest rooms and public spaces, we intend to change brand affiliations to better match and serve the surrounding community.”
BPG also owns The Franklin at Independence Park, 401 Chestnut Street, Philadelphia; the Fairfield Inn King of Prussia; and the Crowne Plaza King of Prussia, at 258 and 260 Mall Blvd., King of Prussia, respectively.
The hotel also provides 20,000 square feet of meeting and event space, including the 7,800 square-foot Society Hill Ballroom capable of hosting up to 900 guests.
Buccini/Pollin has developed and acquired hotel, office, residential, retail, and parking properties throughout the United States, valued at more than $4 billion. Investments include more than 40 hotels, six million square feet of office and retail space, 10 major residential communities and multiple entertainment venues, such as Talen Energy Stadium, home of the Philadelphia Union Major League Soccer team.
“The sale of another non-core asset at a highly accretive valuation highlights the meaningful progress we have achieved in realizing the embedded value from the FelCor merger,” says Ross H. Bierkan, president and chief executive officer of RLJ. “Not only is this disposition highly accretive on a valuation basis, but it is also accretive to our portfolio RevPAR and EBITDA margin. With this transaction, we have accomplished our initial goal of generating approximately $300 million from asset sales at an attractive aggregate multiple. We remain laser-focused on unlocking the embedded value within our portfolio through executing on our strategic initiatives. We continue to expect to execute on a second round of asset sales that will generate an additional $200 million to $400 million in proceeds this year.”
The transaction sale price represents a 14.7-times multiple on the hotel's 2017 EBITDA and approximately a 5.6 percent capitalization rate on the hotel's 2017 net operating income, which excludes planned capital expenditures. The hotel EBITDA margin for the Sheraton Philadelphia was 28.0 percent in 2017, below the Company's reported 33.1 percent EBITDA margin for the year. The hotel's 2017 RevPAR was $119.12 compared with the portfolio average of $135.82.
The Company intends to apply the net proceeds from the sale to pay down its credit facility and for general corporate purposes.
RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns 155 hotels with approximately 30,200 rooms in 26 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.
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Steve Lubetkin
Steve Lubetkin is the New Jersey and Philadelphia editor for GlobeSt.com. He is currently filling in covering Chicago and Midwest markets until a new permanent editor is named. He previously filled in covering Atlanta. Steve’s journalism background includes print and broadcast reporting for NJ news organizations. His audio and video work for GlobeSt.com has been honored by the Garden State Journalists Association, and he has also been recognized for video by the New Jersey Chapter of the Society of Professional Journalists. He has produced audio podcasts on CRE topics for the NAR Commercial Division and the CCIM Institute. Steve has also served (from August 2017 to March 2018) as national broadcast news correspondent for CEOReport.com, a news website focused on practical advice for senior executives in small- and medium-sized companies. Steve also reports on-camera and covers conferences for NJSpotlight.com, a public policy news coverage website focused on New Jersey government and industry; and for clients of StateBroadcastNews.com, a division of The Lubetkin Media Companies LLC. Steve has been the computer columnist for the Jewish Community Voice of Southern New Jersey, since 1996. Steve is co-author, with Toronto-based podcasting pioneer Donna Papacosta, of the book, The Business of Podcasting: How to Take Your Podcasting Passion from the Personal to the Professional. You can email Steve at [email protected].
