Dealmaker: Hersha Acquires Seattle, Miami Hotels for $115M
Hersha Hospitality Trust, Philadelphia, acquired the Pan Pacific Hotel in Seattle and the Ritz-Carlton in Miami in separate transactions totaling $115 million.
The real estate investment trust acquired the 153-room Pan Pacific Hotel from Microsoft co-founder Paul Allen’s Vulcan Real Estate, Seattle. The hotel is part of the 2200 Westlake mixed-use project in South Lake Union, a fast-growing Seattle neighborhood.
Hersha CEO Jay Shah noted that Seattle is one of the country’s fastest-growing economies, reporting the second-highest annual GDP growth rate among major metros at 4.1 percent between 2010 and 2015.
“The Pan Pacific’s location as the closest independent lifestyle hotel to Amazon positions the hotel to be the property of choice for the new-economy businesses in the burgeoning South Lake Union submarket,” Shah said. “South Lake Union has become the most desirable neighborhood in Seattle, with transformational office, retail and residential development all adjacent to the hotel.”
Shah said Hersha plans to engage in a tax-deferred reverse like-kind exchange as part of this transaction. The company expects to sell three west coast Hyatt House hotels in July.
In Florida, Hersha purchased the Ritz-Carlton Coconut Grove from Gencom, Miami, for $36 million.
Hersha President and COO Neil Shah noted that the hotel is in Miami’s highest-growth, highest barrier-to-entry submarket. “The timing is particularly good as the blocks around the hotel are being transformed with high-profile luxury residential just across the street, the retail redevelopment of CocoWalk blocks from the hotel and high quality office development in the Grove,” he said.
Occupying 3.4 acres across the street from Hersha’s 140-room Residence Inn, the Ritz-Carlton Coconut Grove is part of a two-tower, 22-story residential-hotel condominium complex that opened in 2002. The property also includes 14,000 square feet of meeting space, a restaurant, retail space and 8,000 square feet of leasable office space.
Hersha funded the acquisition by selling the Residence Inn in Greenbelt, Md. in January. In addition, Gencom provided a $3.5 million installment note to Hersha.
