BETHESDA, Md.—RLJ Lodging Trust and Hyatt Hotels Corporation announced that Hyatt affiliates have entered into a definitive purchase and sale agreement for RLJ to acquire a portfolio of 10 hotels totaling 1,560 rooms consisting of Hyatt, Hyatt Place, and Hyatt House hotels. A Hyatt affiliate will continue to manage the hotels under new management agreements. The portfolio, which is located primarily on the West Coast, is expected to be acquired for a purchase price of $313 million.
RLJ intends to spend approximately $25 million in capital expenditures across the Hyatt Portfolio, the majority of which will be invested over the next 24 months.
“We are excited about expanding our strategic relationship with Hyatt and increasing our presence on the West Coast,” commented Thomas J. Baltimore, Jr., president and chief executive officer of RLJ Lodging Trust. “Once completed, we will have acquired almost $900 million of assets since our IPO. This deal will be immediately accretive to the portfolio and will reinforce our stated goal of becoming the aggregator in this segment.”
“This transaction demonstrates the value from asset recycling. We were able to successfully convert hotels in key markets to Hyatt brands and sell these hotels to a high quality owner while maintaining long term presence in key markets,” said Steve Haggerty, Global Head, Real Estate and Capital Strategy for Hyatt. “We are delighted to deepen our relationship with the team at RLJ Lodging Trust and look forward to future collaboration with them.”
The portfolio consists of young, high-performing, and well-situated hotels. The hotels, the majority of which were acquired by Hyatt in 2011, will immediately increase RLJ’s West Coast presence, particularly in California where the company is currently seeking to grow its presence. With the addition of this portfolio, RLJ will more than double its hotel earnings before interest taxes depreciation and amortization (EBITDA) on the West Coast. The remaining hotels are located in dense premier markets with multiple demand generators.
RLJ estimates that the Hyatt Portfolio’s 2013 aggregate RevPAR will be greater than $120, which is more than a 10 percent premium to RLJ’s projected RevPAR for 2013. Also, more than half of the hotels are expected to be added to RLJ’s top 50 EBITDA contributors.