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May 17, 2019updated 18 May 2019 6:24pm

Chatham Lodging Trust divests two hotels in Pennsylvania

Chatham Lodging Trust, a hotel real estate investment trust (REIT), has divested the 105-room Courtyard by Marriott Altoona, as well as the 86-suite SpringHill Suites by Marriott Washington, Pennsylvania, for around $10m.

Chatham Lodging Trust, a hotel real estate investment trust (REIT), has divested the 105-room Courtyard by Marriott Altoona, as well as the 86-suite SpringHill Suites by Marriott Washington, Pennsylvania, for around $10m.

Chatham divested the hotels at an around 6% net operating income capitalisation rate following an assumed annual capital reserve of 4% of total hotel revenues.

Chatham chief executive officer and president Jeffrey H Fisher said: “We acquired these smaller hotels as part of a portfolio purchase in 2010, and the hotels had a pretty good run for five years, but no longer meet our long-term investment strategy.

“These two non-core hotels, in very small markets and with combined RevPAR of $65, do not match the overall quality of our portfolio. Excluding the sold hotels, our comparable portfolio RevPAR increases to $135 from $133. Importantly, we do not have to invest over $4 million renovating these hotels.

“We will continue to opportunistically sell assets when we believe we can re-deploy those proceeds into high-quality hotel investments that earn higher yields in higher growth markets, thus enhancing our net asset value.”

According to the company’s estimates, the hotels would have contributed around $1m of EBITDA this year.

Net proceeds from the divestment will be utilised to cut down borrowings on Chatham’s unsecured credit facility.

The firm owns interests in 135 hotels totaling 18,592 rooms or suites.

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