BETHESDA, Md.–(hospitalitybusinessnews.com)– RLJ Lodging Trust today announced it has acquired the 164-room Hyatt Place DC/Downtown/K Street in Washington, D.C. and will acquire within the next few days the 170-room Homewood Suites Seattle/Lynnwood in Lynnwood, WA for a combined purchase price of $105.9 million. The Company will use the cash available on its balance sheet for both acquisitions.
“We are excited to add another high quality hotel to our Washington, D.C. portfolio and expand our West Coast footprint with our first hotel in the greater Seattle area,” commented Thomas J. Baltimore, Jr., President and Chief Executive Officer. “These two acquisitions demonstrate our ability to leverage our extensive network to source accretive, off-market transactions in key target markets.”
The Company acquired the recently opened Hyatt Place DC/Downtown/K Street in an off-market transaction for a purchase price of $68.0 million, or approximately $415,000 per key. The purchase price represents a forward capitalization rate of approximately 7.1% on the hotel’s projected 2016 net operating income and the projected 2016 RevPAR is approximately 53.0% higher than the Company’s 2014 reported RevPAR. The property opened in April 2015 following an extensive renovation and conversion from an office building. Located in downtown Washington, D.C., the Hyatt Place is four blocks from three metro stations and centrally located to numerous business and leisure demand generators such as the White House, government agencies, national associations and law firms.
The Washington, D.C. market is poised for accelerated growth heading into 2016 and through 2017. The citywide pace for 2016 is approximately 20.0% higher than the current year pace and 2017 demand is pacing to exceed prior peak levels of 2005 and 2008, bolstered by the 58th presidential inauguration. The strong convention calendar combined with solid corporate and leisure demand are positive indicators for sustained lodging growth over the next couple of years.
The Company also will acquire the 170-room Homewood Suites Seattle/Lynnwood for $37.9 million, or approximately $223,000 per key. The purchase price represents a forward capitalization rate of approximately 8.0% on the hotel’s projected 2016 net operating income. Opened in May 2014, the Homewood Suites is located in Seattle’s premier Lynnwood submarket, a region anchored by diverse industries such as aerospace, technology and healthcare. The Seattle market has been one of the strongest performing Top 25 markets as defined by Smith Travel Research with 12.6% RevPAR growth in 2014 and 10.9% year-to-date as of May 2015.
These recently opened properties are immediately accretive to the Company’s portfolio RevPAR and are well positioned to take advantage of strong demand dynamics. With the addition of these two assets, the Company will own approximately 128 properties, comprised of 126 hotels with approximately 20,800 rooms and two planned hotel conversions, located in 22 states and the District of Columbia.