CHICAGO — Ashford Hospitality Prime Inc. (NYSE: AHP) has acquired the 415-room Sofitel Chicago Water Tower hotel for $153 million, or $369,000 per key. The purchase price represents a cap rate of 6.8 percent on a forward 12-month basis.
In 2013, the Sofitel Chicago Water Tower recorded revenue per available room (RevPAR) of $182, average occupancy of 82 percent and average daily rate (ADR) of $222. AHP, which was created in November of last year in a spin-off from Ashford Hospitality Trust, funded the acquisition with a five-year, $80 million non-recourse mortgage with a floating rate of LIBOR plus 2.3 percent.
“Aside from being our first acquisition since the spin-off from Ashford Trust, the purchase of the Sofitel Chicago Water Tower is an extremely attractive transaction for Ashford Prime,” says Monty Bennett, AHP chairman and CEO. “We have gained a high-RevPAR luxury hotel in the heart of Chicago, a key U.S. gateway market. Additionally, the hotel will increase Prime’s overall average RevPAR and broaden our portfolio by market, brand and manager.”
Located in the Gold Coast submarket of Chicago, the four-star hotel is in close proximity to the Magnificent Mile retail district. The American Institute of Architects recently included the 32-story structure, which was designed by French architect Jean-Paul Viguier, on its list of “America’s Favorite Architecture.”
Sofitel will continue to manage the property, which features more than 10,000 square feet of meeting space, including a 4,592-square-foot ballroom, eight meeting rooms and a private dining room; restaurant Café des Architectes; and fitness facilities. Rooms feature custom furniture designed by interior designer Pierre-Yves Rochon and beds with Sofitel’s feathertop and duvet sleep system.
PKF Consulting reports that Chicago hotel occupancies have exceeded the prior peak levels of 2008. The research firm also predicts the Windy City will record fourth highest RevPAR growth among U.S. metros through the end of 2015.
Dallas-based Ashford Hospitality Prime is a REIT focused on investing in full-service and urban select-service hotels and resorts with high-RevPAR in both domestic and international markets. The company’s stock price closed at $16.92 per share on Feb. 26, down from its initial listing on Nov. 6 of $20.04 per share.
— John McCurdy