RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today announced that it
has acquired the 215-room DoubleTree Grand Key Resort (the “Hotel”)
located in Key West, FL for a purchase price of $77.0 million, or
approximately $358,000 per key.
“We are excited to add an additional Key West asset to our portfolio at
a significant discount to both replacement cost and recent per-key
trades,” commented Thomas J. Baltimore, Jr., President and Chief
Executive Officer. “We expect that our knowledge of the market along
with the implementation of various initiatives will create additional
upside at this strategically-located hotel.”
The Company plans to implement several enhancements including upgrading
the property and replacing the Hotel’s management company. Upon
completing an estimated $7.0 million renovation in 2015, the Company
expects that the purchase price plus capital expenditures will represent
a forward capitalization rate of approximately 8.0% based on the Hotel’s
projected 2016 net operating income.
The Hotel benefits from its location in Key West, which is one of the
highest barrier-to-entry hotel markets in the country. Key West’s Rate
of Growth Ordinance caps the number of building permits allowed on the
island. As a result, new supply is highly constrained, providing a very
favorable environment for lodging fundamentals and hotel ownership on
the island.
Recognized as one of the country’s premier tourist destinations, Key
West has strong leisure appeal for both domestic and international
visitors. The island’s year-round temperate climate allows visitors to
enjoy a variety of activities, including world class fishing,
snorkeling, scuba diving, and boating. A variety of events are also held
on the island year-round that attract visitors worldwide.
In 2013, the Key West market revenue per available room (“RevPAR”) was
almost $218, one of the highest RevPAR markets in the country. Key
West's RevPAR growth in 2013 was 17.8% and the trailing twelve months as
of July 2014 was 20.5%. The Hotel’s 2013 RevPAR is nearly a 50% premium
to the Company’s 2013 Pro forma RevPAR, which will further enhance the
composition of the Company’s portfolio.
The market’s extremely restrictive development profile and strong
leisure demand are expected to maintain positive lodging fundamentals in
this premier market. The Hotel is expected to capture additional upside
after the completion of a comprehensive renovation and the
implementation of new revenue management and cost containment
initiatives.
With the addition of this asset, the Company now owns 150 properties,
comprised of 148 hotels with more than 23,300 rooms and two planned
hotel conversions, located in 21 states and the District of Columbia.
About Us
RLJ Lodging Trust is a self-advised, publicly traded real estate
investment trust focused on acquiring premium-branded, focused-service
and compact full-service hotels.
Forward Looking Statements
The following information contains certain statements, other than
purely historical information, including estimates, projections,
statements relating to the Company’s business plans, objectives and
expected operating results, and the assumptions upon which those
statements are based, that are "forward-looking statements" within the
meaning of the Private Securities Litigation Reform Act of 1995, Section
27A of the Securities Act of 1933, as amended and Section 21E of the
Securities Exchange Act of 1934, as amended. These forward-looking
statements generally are identified by the use of the words “believe,”
“project,” “expect,” “anticipate,” “estimate,” “plan,” “may,” “will,”
“will continue,” “intend,” “should,” “may” or similar expressions.
Although the Company believes that the expectations reflected in such
forward-looking statements are based upon reasonable assumptions,
beliefs and expectations, such forward-looking statements are not
predictions of future events or guarantees of future performance and the
Company’s actual results could differ materially from those set forth in
the forward-looking statements. Some factors that might cause such a
difference include the following: the current global economic
uncertainty, increased direct competition, changes in government
regulations or accounting rules, changes in local, national and global
real estate conditions, declines in the lodging industry, seasonality of
the lodging industry, risks related to natural disasters, such as
earthquakes and hurricanes, hostilities, including future terrorist
attacks or fear of hostilities that affect travel, the Company’s ability
to obtain lines of credit or permanent financing on satisfactory terms,
changes in interest rates, access to capital through offerings of the
Company’s common and preferred shares of beneficial interest, or debt,
the Company’s ability to identify suitable acquisitions, the Company’s
ability to close on identified acquisitions and integrate those
businesses and inaccuracies of the Company’s accounting estimates. Given
these uncertainties, undue reliance should not be placed on such
statements. Except as required by law, the Company undertakes no
obligation to update or revise publicly any forward-looking statements,
whether as a result of new information, future events or otherwise. The
Company cautions investors not to place undue reliance on these
forward-looking statements and urge investors to carefully review the
disclosures the Company makes concerning risks and uncertainties in the
sections entitled “Risk Factors,” “Forward-Looking Statements,” and
“Management’s Discussion and Analysis of Financial Condition and Results
of Operations” in the Company’s Annual Report, as well as risks,
uncertainties and other factors discussed in other documents filed by
the Company with the SEC.
Copyright Business Wire 2014