NORTHSTAR, CHATHAM FORM $1.3B JV FOR 51-HOTEL PORTFOLIO

by admin

NEW YORK CITY AND PALM BEACH, FLA. — Two real estate investment trusts, NorthStar Realty Finance (NYSE: NRF) and Chatham Lodging Trust (NYSE: CLDT), have formed a $1.3 billion joint venture for 51 hotels known as the Innkeepers portfolio. NorthStar purchased a 89.7 percent stake in the joint venture from Chatham’s previous joint venture partner, Cerberus Capital Management.

NorthStar and Chatham will co-own 47 of the 51 hotels, which total about 6,100 rooms. Approximately 83 percent of the hotels are affiliated with the Marriott and Hilton brands and are located mostly on the East and West coasts.

Chatham will pay approximately $341.5 million to Cerberus for the four remaining hotels: four Residence Inn hotels in Silicon Valley that total 751 rooms. Chatham plans to invest $59 million to redevelop the hotels, which will include new lobby and public spaces in each hotel. Chatham will also expand the hotels’ room counts by 272 rooms combined.

“The Cerberus/Chatham joint venture has been a great partnership and has proven to be a highly successful investment, turning our initial $37 million investment into distributions of approximately $114 million and profits of approximately $77 million, or $2.90 per share, in less than three years,” says Dennis Craven, chief financial officer of Chatham Lodging Trust.

The joint venture has retained Inland Hospitality to manage the Innkeepers portfolio.

“We are enthusiastic about both the acquisition of the Innkeepers portfolio and the start of a broader strategic relationship with the teams at Chatham Lodging and Island Hospitality,” says David Hamamoto, chairman and CEO of NorthStar Realty Finance.

“We expect 2014 to be an active and prosperous year for Chatham with solid operating fundamentals in our existing portfolio, strong gains to be recognized on the recapitalization of the Innkeepers joint venture and significant external growth attributable to the acquisition of four great hotels in the heart of Silicon Valley,” adds Jeff Fisher, CEO of Chatham Lodging Trust.

According to Chatham Lodging Trust, the Innkeepers portfolio experienced RevPAR growth of 6.9 percent to $98. The portfolio also had a 4.4 percent increase in average daily rate (ADR) to $133 and a 2.3 percent increase in occupancy to 73 percent.

NorthStar Realty Finance Corp., based in New York City, is a commercial real estate investor and asset management firm operating as a REIT. The company's stock price closed Friday at $15.53 per share, up from $9.73 per share this time last year.

Chatham Lodging Trust, based in Palm Beach, Fla., owns interests in 77 hotels totaling 10,688 rooms/suites, comprised of 25 hotels it wholly owns with an aggregate of 3,592 rooms/suites in 15 states and Washington, D.C. The remaining 52 hotels are minority investment stakes in two joint ventures with an aggregate of 7,096 rooms/suites. The REIT’s stock price closed Friday at $21.88 per share, up from $18.60 per share this time last year.

— John Nelson

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