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.
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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.
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By GlobalDataNet 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.
