US: Chatham Lodging Trust has acquired two branded extended stay hotels comprising 269 rooms at the Domain mixed-use development in Austin, Texas.
The off-market $71.2 million transaction covers the the 132-room Residence Inn Austin Domain, which opened in July 2016, and the 137-room TownePlace Suites Austin Domain, which opened in June 2021. It equates to approximately $265,000 per key.
“Having actively managed our way through the worst era in the history of the hotel industry, our actions have enabled us to emerge from the pandemic with a stronger balance sheet and more liquidity,” said Jeffrey H. Fisher, Chatham’s chief executive officer and president. “This has given us the flexibility and the confidence to be acquisitive when we identify opportunities that fit our stringent criteria, and the Austin Acquisitions are ideal additions to our portfolio. Strategically, our acquisitions are aimed at increasing further our exposure to premium-branded, extended-stay hotels, enhancing portfolio RevPAR and reducing the average age of our portfolio. The Austin Acquisitions check all of these boxes, will be two of our four newest hotels and are expected to producing RevPAR levels higher than our portfolio average.”
The Domain is a mixed-use development known as Austin’s “second downtown” with more than 4.2 million square feet of office space, 1.8 million square feet of retail space, plus another 2.8 million additional square feet of office space expected to be delivered over the next two years and another 3.8 million square feet of office space planned thereafter. Companies with large offices located at The Domain include IBM, Amazon, Facebook, Indeed, Expedia / VRBO and Trend Micro Companies. Apple currently is constructing a two million square foot office campus approximately five miles from the hotels that will cost more than $1 billion and eventually accommodate around 15,000 employees.
“Austin is unique in that it benefits from strong corporate, group and leisure demand as evidenced by many of these market attributes, and the Domain is an absolutely booming market within Austin. The Austin Acquisitions are in an outstanding location within walking distance of everything the Domain has to offer. We will be able to leverage our deep relationships with key accounts in our other markets such as Silicon Valley or Bellevue, Wash., to drive higher RevPAR performance in Austin. Lastly, the Austin Acquisitions will generate premium RevPAR growth over the next cycle, be accretive to FFO and enhance our net asset value,” said Fisher.
Chatham funded the purchase using a portion of the proceeds from the recently completed Series A Preferred Share offering. The hotels will be managed by Island Hospitality Management, which is owned by Fisher.
Chatham Lodging Trust is a self-advised, publicly traded real estate investment trust focused primarily on investing in upscale, extended-stay hotels and premium-branded, select-service hotels. The company owns 41 hotels with 6,169 keys in 15 states and the District of Columbia.
