LaSalle Hotel Properties Announces Acquisition of Southernmost Hotel Collection in Key West, Florida for $184.5 Million
LaSalle Hotel Properties (NYSE: LHO) today announced that it acquired the 260-room Southernmost Hotel Collection in Key West, Florida. The purchase price was $184.5 million. The Southernmost Hotel Collection consists of the Southernmost on the Beach, Southernmost Hotel in the USA and La Mer Hotel & Dewey House. The Company funded the transaction with borrowings from its Senior Unsecured Credit Facility.
The property is situated directly on the Atlantic Ocean in Key West, Florida, one of thestrongest and most supply-constrained hotel markets in the United States. The hotel is located on the southern end of Duval Street, which runs through Key West's "Old Town" and is home to many of its famous bars, restaurants, shops, bed and breakfasts and historic sites.
The Hotel features 3,128 square feet of meeting space, including 2,488 square feet ofoutdoor space. The restaurant, Southernmost Beach Café, which is located on the beach overlooking the Atlantic Ocean, serves breakfast, lunch and dinner and provides catering for private events. The Hotel also has three bars located throughout the property. The Shores Bar and Sand Bar are located at Southernmost on the Beach, while the Pineapple Bar is located at Southernmost Hotel in the USA. The property also offers three pools, a tanning pier, a private oceanfront beach and access to the public beach, South Beach. The Southernmost Hotel Collection includes La Petit Spa and a fitness center in addition to offering resort recreation and activities.
The property is in excellent condition, as $13.8 million has been invested in renovationsover the last three years. The Southernmost Hotel Collection will be operated by Highgate Hotels.
Southernmost on the Beach
Southernmost on the Beach consists of six guestroom buildings. The two originalbuildings were remodeled in 2010 and 2011. Four additional guestroom buildings were constructed in 2008. Additional recent upgrades include the construction of the private beach and garden areas, renovation of the pool, construction of Shores Bar, a new fitness area and renovation and expansion of the lobby.
The property's guestrooms average approximately 400 square feet, with the majority ofthe rooms being oceanfront or featuring ocean views.
Southernmost Hotel in the USA
The Southernmost Hotel in the USA includes six guestroom buildings, all of which haveundergone periodic renovations, with the most recent renovation taking place in 2011 and 2012. Recent renovations also include the construction of a new pool and renovation of an existing pool area, construction of Pineapple Bar and expansion of the lobby.
La Mer Hotel & Dewey House
Both Victorian Houses feature bed and breakfast ambiance and were built around theturn of the 20th century. The Dewey House was converted to its current use in 1995. La Mer Hotel was converted to its current use in 1985, then fully remodeled in 2003.
"We are very excited to have acquired this unique, extremely well located asset," saidMichael D. Barnello, President and Chief Executive Officer of LaSalle Hotel Properties. "The property is located on the ocean in one of the strongest U.S. markets and features an attractive variety of amenities and offerings. Furthermore, the asset is in excellent condition with more than $50,000 per key invested in renovations and construction over the last three years."
Key West, Florida is a premier tourist destination known for its year-round temperateclimate, natural beauty and casual atmosphere. The market offers a variety of activities, including world-class fishing, scuba diving, snorkeling, boating, sailing, kayaking and eco-tours. It is also a popular cruise ship port. Numerous festivals and events are held in Key West throughout the year, including the Key West Fishing Tournament, Super Powerboat Races, Fantasy Fest, Songwriters Festival, Key West Food & Wine Festival, Brewfest and international sailboat races.
Key West is an extremely supply-constrained market. Average annual supply growth hasincreased less than 1.0 percent since 1992. The combination of low supply growth and strong leisure demand has resulted in strong results for the Key West lodging market. Over a 25 year period, through 2012, the compound annual growth rate of RevPAR in Key West was ranked second highest among LHO's core markets. The following charts highlight the strength of the Key West market relative to the overall United States market over several periods and the market's resilience during periods of recession.
Key West is served by Key West International Airport, which is approximately four milesaway from the Southernmost Hotel Collection.