Dealmaker: Chatham Lodging Acquires Two Hotels, $88M

Chatham Lodging Trust, West Palm Beach, Fla., acquired two hotel properties near Washington, D.C. and Charleston, S.C., for $88.2 million.

Chatham focuses on the upscale extended-stay and select-service hotel sectors.

The real estate investment trust purchased the 219-suite Embassy Suites by Hilton in Springfield, Va., for $68 million–$310,000 per suite–in an off-market transaction. It funded the purchase through available cash from its recently completed 5 million share offering that raised $109 million. After this acquisition, Chatham has invested more than 80 percent of share offering proceeds.

Chatham CEO and President Jeffrey Fisher called new development “difficult” in the Springfield market and said there is little new supply on the horizon. He said the asset generates a nearly 10 percent revenue per available room premium to Chatham’s existing properties and the 2003-vintage property lowers the firm’s average portfolio age.

“The hotel is located less than two miles from Fort Belvoir, the nation’s fifth largest military base and the largest employer in Fairfax County,” Fisher said. He noted the Transportation Security Administration plans to relocate its headquarters and 4,000 employees to within two miles of the hotel by August 2020.

In Summerville, S.C., Chatham Lodging acquired the 96-room Courtyard by Marriott Charleston for $20.2 million, or $210,000 per room.

Fisher said Chatham already has an adjacent, currently under construction Residence Inn by Marriott under contract. That 96-unit property will open in the second quarter.

Chatham COO Dennis Craven said many people consider Charleston a purely leisure market, noting Conde Nast ranked the city the top tourist destination in the country for the past five years. “However, South Carolina–and more specifically the greater Charleston area–already has experienced significant economic expansion and is going to see much more in the future,” he said. “This hotel, as well as the acquisition of the under-construction adjacent hotel next year, are expected to realize higher top-line growth in the future tied to corporate demand.”