RLJ Lodging Trust (NASDAQ: RLJ
) has closed on its acquisition of two West Coast hotels, purchased for a combined $120 million, or about $219,000 per door, from Cornerstone Real Estate Advisors, Inc.
The sale represents a pro-forma CAP rate of approximately 7.4% on the combined projected 2015 net operating income. The two assets' aggregate revenue per available room (RevPAR) is greater than $116.
The 256-room Courtyard Portland City Center in Portland, OR is a custom-designed hotel in the heart of downtown. With high barriers to entry, the property is set to capitalize on corporate, group and leisure demand stoked by the area's diverse and growing economy with a broad base of national employers, numerous tourist attractions, and the Oregon Convention Center.
The 293-room Embassy Suites Irvine Orange County in Irvine, CA is an upscale hotel located less than a mile from John Wayne Airport. The property is located in the largest office submarket in Orange County, with more than 46 million square feet of office and industrial space in the immediate area. Its all-suite product draws corporate and leisure travelers, given its close proximity to Disneyland, iconic beaches, and various sporting events.
"This portfolio acquisition is another great example of our ability to source attractive, off-market opportunities," commented Thomas J. Baltimore, Jr., president and chief executive officer. "Both assets benefit from prime central locations, strong brand affiliations, and strong operating performance. With the acquisition of these two hotels, we continue to expand our West Coast presence and upgrade our portfolio’s overall quality."
The buyer funded the acquisition in-part with cash on hand from the company's balance sheet and its revolving credit facility, which it plans to repay using proceeds from its recently announced follow-on offering. With this acquisition, the company's portfolio now totals 148 properties with 23,000 rooms across 21 states. RLJ is a self-advised, publicly-traded REIT focused on premium-branded and compact full-service hotels.
Please see CoStar COMPS #3031507 for additional information on this transaction.