PORTLAND, ORE. AND IRVINE, CALIF. — RLJ Lodging Trust (NYSE: RLJ) has acquired two hotels on the West Coast, the 256-room Courtyard Portland City Center in Portland, Ore., and the 293-room Embassy Suites Irvine Orange County in Irvine, Calif., in an off-market transaction for $120 million. The purchase price, which equals approximately $219,000 per key, represents a 7.4 percent cap rate on the hotels’ projected 2015 net operating income.
“Both assets benefit from prime central locations, strong brand affiliations and strong operating performance,” says Thomas Baltimore Jr., president and CEO of RLJ Lodging Trust. “With the acquisition of these two hotels, we continue to expand our West Coast presence and upgrade our portfolio’s overall quality.”
The custom-designed Courtyard Portland City Center’s location in downtown Portland enables the hotel to benefit from corporate, group and leisure demand throughout the city. According to RLJ, downtown Portland’s relatively high barriers to entry are expected to limit new hotel supply.
The all-suite Embassy Suites Irvine Orange County hotel is located less than one mile from the John Wayne Airport. According to RLJ, the hotel is located in the largest office submarket in Orange County, with more than 22 million square feet of office space and more than 24 million square feet of industrial space within close proximity. The hotel’s all-suite product is also an option for visitors to destinations including Disneyland, the beaches of Huntington Beach and Laguna Beach and the area’s various sporting events.
The purchases were funded with cash available on RLJ’s balance sheet and its revolving credit facility. The company expects to use proceeds from the recently announced follow-on offering to repay its revolving credit facility.
With the addition of these two hotels, RLJ Lodging Trust now owns 148 properties in 21 states and Washington, D.C., consisting of 146 hotels with approximately 23,000 rooms and two planned hotel conversions.
RLJ’s stock price closed at $27.91 per share on Friday, May 23, up 19 percent from $23.39 per share a year ago.
— Scott Reid