WILLIAMSBURG, Va., Aug. 06, 2015 (hospitalitybusinessnews.com) — SoTHERLY Hotels Inc. today announced that the Company has acquired the remaining 75.0% interest in the entities that own the 311-room Crowne Plaza™ Hollywood Beach Resort (the “Hotel”) located in Hollywood, Florida for $26.25 million. The Company previously owned a 25.0% non-controlling interest in the Hotel through a joint venture with an affiliate of The Carlyle Group.
As a part of the transaction, the Company assumed the existing $57.0 million first mortgage with Bank of America, N.A. The loan carries a floating interest rate of the 1-month LIBOR rate plus 3.95%, is interest only, and matures in January 2017.
The Hotel will continue to be managed by Chesapeake Hospitality under a new management agreement which includes a reduced base management fee structure and terms consistent with the Company’s other management agreements with Chesapeake Hospitality.
For year-end 2014, the Hotel operated at 83.6 percent occupancy, with an average daily rate (“ADR”) of $162.15, room revenue per available room (“RevPAR”) of $135.55, hotel earnings before interest, taxes, depreciation, and amortization (“Hotel EBITDA”) of approximately $6.4 million, and net operating income after capital reserves (“NOI”) of approximately $5.6 million. The Hotel is being acquired at a blended cost basis of approximately $87,900,000 or $282,600 per key. The acquisition price represents a cap rate of approximately 7.4% on 2015 estimates.
Drew Sims, Chief Executive Officer of the Company, commented, “Acquiring the outstanding ownership interests of the Hollywood Hotel is a milestone event for SoTHERLY Hotels. Coupled with our first common stock offering since our IPO, this transaction represents the culmination of nearly a decade of involvement and steps taken towards whole ownership of this asset. This hotel gives us a premier leisure property in the fourth largest MSA in the Southern United States. This is a hotel and market we know extremely well and we look forward to having full control of the asset and unlocking additional value for our shareholders.”
The Hollywood Hotel opened in September 2007 and is centrally located to enjoy both the Intracoastal Waterway and Atlantic Ocean access. With 311 luxury guestrooms and suites, the Hollywood Hotel is also close to both Fort Lauderdale and Miami, as well as the Hollywood Conference Center, Gulfstream Park, Hard Rock Casino, Sun Life Stadium, which is home to Miami’s NFL and MLB teams, and South Florida’s famous beaches and nightlife. The oversized luxury guestrooms and suites include kitchenette amenities such as microwave ovens and refrigerators. All guestrooms have a walk-out balcony with partial Intracoastal Waterway and ocean views. The Hollywood Hotel has seating both inside and outside the resort – Elements Bistro serves an Asian/Caribbean fused menu for breakfast, lunch and dinner and the poolside Lava Tiki Bar & Grille offers hearty bar food and signature cocktails. Located in the resort lobby, the Cool Beans Coffee Bar has a full selection of Starbucks coffees. The Hollywood Hotel enjoys easement rights allowing direct access to the beach. The Hollywood Hotel also has a health and fitness center, gift shop, business center, outdoor open-air infinity-edge resort pool overlooking the Intracoastal Waterway and 10,000 square feet of full-service banquet and meeting space, including a 3,200 square foot climate-controlled outdoor event tent.