BETHESDA, Md.—RLJ Lodging Trust today announced that it has acquired the 194-room Hyatt Atlanta Midtown located in Atlanta, Ga., for a purchase price of $49.5 million, or approximately $255,000 per key. The purchase price represents a forward capitalization rate of approximately 8 percent on the hotel’s projected 2015 net operating income. The company purchased the hotel with proceeds from its recent equity offering.
Originally opened in 1987 as a Wyndham, the hotel was closed by the prior owner to perform a $23 million comprehensive renovation and conversion to a compact full-service Hyatt. The Hotel re-opened in July 2013. The company projects that during its first year of full ownership, the hotel’s revenue per available room (RevPAR) will be more than a 16 percent premium to the company’s reported 2013 RevPAR.
“We are excited to add this newly renovated asset to our portfolio and continue to expand our relationship with Hyatt,” commented Thomas J. Baltimore Jr., president and chief executive officer. “The purchase of the hotel is immediately accretive to our portfolio and its central location in Midtown Atlanta, one of the most dynamic markets in the Southeast, will position it for exceptional growth.”
The hotel will benefit from Atlanta’s location as one of the country’s major gateways to the Southeast. Atlanta’s economy features diverse demand generators with a strong corporate presence, robust convention activity, and a steady flow of tourism. Several Fortune 500 companies such as The Coca-Cola Company, UPS, Home Depot, and Delta Air Lines are headquartered in the Atlanta metro. The level of corporate demand is expected to increase from planned relocations and expansions by companies such as General Motors, Pulte Group, and State Farm. Atlanta is also one of the top convention destinations with a variety of conference facilities. Recognized as one of the premier entertainment destinations in the region, Atlanta features a multitude of cultural and sporting events.
The hotel is the only Hyatt branded hotel in Midtown, a submarket known for its urban, high-density office, commercial, and residential settings. The approximately 16.5 million square feet of office space brings steady demand from major employers including the Federal Reserve Bank of Atlanta, Georgia Institute of Technology, Equifax, AT&T, Invesco, Norfolk Southern, and PricewaterhouseCoopers. In addition, Midtown is home to eight of the ten largest law firms in Atlanta. The Hotel is in close proximity to local tourist attractions such as the High Museum of Art, Fox Theatre, and Piedmont Park that generate ample leisure demand.
The company expects that the hotel will benefit from its strong location, premium brand affiliation, and the relative scarcity of Hyatt branded hotels in Midtown Atlanta. With the addition of this asset, the company now owns 149 properties, comprised of 147 hotels with more than 23,100 rooms and two planned hotel conversions, located in 21 states and the District of Columbia.