Dealmaker: Chatham Lodging Buys Marina del Rey Hotel for $45M

Chatham Lodging Trust, Palm Beach, Fla., acquired the 134-room Hilton Garden Inn Marina del Rey in California for $44.5 million, or $332,000 per room.   

The real estate investment trust funded the purchase by assuming a $22.6 million loan that carries a 4.68 percent interest rate and matures in July 2024 as well as cash on hand and its revolving credit facility. The hotel is subject to a long-term ground lease that matures in 2067.

“The hotel is in the heart of the rapidly growing technology hub referred to as Silicon Beach, a five-mile stretch between Santa Monica and Playa Vista where technology stalwarts such as Google, Microsoft, Yahoo, YouTube, Sony, Belkin and Facebook have or are expected to establish a meaningful presence,” said Chatham President and CEO Jeffrey Fisher.

Fisher called Marina del Rey an extremely high barrier-to-entry market. He noted that Chatham acquired $190 million of hotels through non-marketed transactions in 2015, increasing its hotel investment by more than 15 percent and expanding its wholly owned room count by 11 percent. 

The Hilton Garden Inn Marina del Rey hotel converted from an independent hotel in June 2013 after an extensive renovation. The property will require no major capital investment until 2020, Fisher said. 

Chatham said it acquired the property at a first-year net operating income capitalization rate in the 8 percent range.

“Silicon Beach is one of the major driving forces behind the significant job growth and office and commercial expansion occurring in western Los Angeles,” said Chatham COO and executive vice president Dennis Craven. “Year-to-date revenue per available room in Marina del Ray is up approximately 17 percent through July. We expect lodging demand to remain strong for the foreseeable future given the strong outlook for economic expansion in the market.”