BETHESDA, Md.—RLJ Lodging Trust announced that it has entered into a purchase and sale agreement to acquire upon completion the 231-room Hilton Cabana Miami Beach for a fixed purchase price of $71.6 million, or approximately $310,000 per key.
The property opened as a hotel in the early 1950’s and was closed and gutted in 2007 in anticipation of a condominium conversion. The conversion did not materialize and the property went into foreclosure. In 2011, the current owners purchased the property to develop a new hotel, which they expect to complete and open in the fourth quarter of 2013 as a Hilton.
“We are thrilled to be entering the Miami Beach market. We see this acquisition as an excellent opportunity to enter a gateway market with multiple demand generators,” commented Thomas J. Baltimore, Jr., president and chief executive officer. “Furthermore, the Hilton brand is underrepresented in this market which should provide for outsized performance from this hotel.”
n 2011, the Miami-Hialeah market posted a 14.1 percent RevPAR increase over 2010 and it continued to show strong signs of growth with a 7.9 percent RevPAR growth year-to-date through September 2012, as reported by STR.
Upon entering the agreement, RLJ Lodging Trust committed to a $7.2 million deposit that will be refunded if the hotel is not completed. The company is not assuming any construction risk, including the risk of construction overruns. RLJ expects that construction will be completed in approximately 12 months, with an anticipated opening late in fourth quarter of 2013.
The acquisition of this hotel is subject to other various conditions, including the substantial completion of the hotel by a third-party developer within the contractual scope of the agreement.