RLJ Lodging Trust Intends to Expand West Coast Presence with a $313 Million, 10-Hotel Portfolio Acquisition from Affiliates of Hyatt Hotels Corporation
RLJ Lodging Trust (NYSE: RLJ) ("RLJ") and Hyatt Hotels Corporation (NYSE: H) ("Hyatt") today announced that Hyatt affiliates have entered into a definitive purchase and sale agreement for RLJ to acquire a portfolio of 10 hotels totaling 1,560 rooms (the "Hyatt Portfolio") consisting of Hyatt, Hyatt Place and Hyatt House hotels. A Hyatt affiliate will continue to manage the hotels under new management agreements.
acquired for a total purchase price of approximately $313 million. RLJ intends to spend approximately $25 million in capital expenditures across the Hyatt Portfolio, the majority of which will be invested over the next 24 months.
"We are excited about expanding our strategic relationship with Hyatt and increasing ourpresence on the West Coast," commented Thomas J. Baltimore, Jr., President and Chief Executive Officer of RLJ Lodging Trust. "Once completed, we will have acquired almost $900 million of assets since our IPO. This deal will be immediately accretive to the portfolio and will reinforce our stated goal of becoming the aggregator in this segment."
"This transaction demonstrates the value from asset recycling. We were able tosuccessfully convert hotels in key markets to Hyatt brands and sell these hotels to a high quality owner while maintaining long term presence in key markets," said Steve Haggerty, Global Head, Real Estate and Capital Strategy for Hyatt. "We are delighted to deepen our relationship with the team at RLJ Lodging Trust and look forward to future collaboration with them."
Hyatt is a highly recognized, quality company with significant global presence. The HyattPortfolio consists of young, high-performing, and well-situated hotels. The hotels, the majority of which were acquired by Hyatt in 2011, will immediately increase RLJ's West Coast presence, particularly in California where the company is currently seeking to grow its presence. With the addition of this portfolio, RLJ will more than double its hotel earnings before interest taxes depreciation and amortization (EBITDA) on the West Coast. The remaining hotels are located in dense premier markets with multiple demand generators.
RLJ continues to execute its stated strategy of becoming the leading owner of premierselect-service hotels. The Hyatt Portfolio will represent more than 7% of RLJ's projected 2013 Hotel EBITDA and more than 7% of its total enterprise value. The Hyatt Portfolio is another testament to RLJ's disciplined approach of acquiring institutional grade hotels in premier markets.
RLJ estimates that the Hyatt Portfolio's 2013 aggregate RevPAR will be greater than$120, which is more than a 10% premium to RLJ's projected RevPAR for 2013. Also, more than half of the hotels are expected to be added to RLJ's top 50 EBITDA contributors.
Details of the hotels are listed below:
- Hyatt House Cypress / Anaheim | Cypress | CA | 142
- Hyatt House Emeryville / SF Bay Area | Emeryville | CA | 234
- Hyatt Place Fremont / Silicon Valley | Fremont | CA | 151
- Hyatt House San Diego / Sorrento Mesa | San Diego | CA | 193
- Hyatt House San Jose / Silicon Valley | San Jose | CA | 164
- Hyatt House San Ramon | San Ramon | CA | 142
- Hyatt House Santa Clara | Santa Clara | CA | 150
- Hyatt Market Street, The Woodlands | Woodlands | TX | 70
- Hyatt House Charlotte / Center City | Charlotte | NC | 163
- Hyatt Place Madison / Downtown | Madison | WI | 151
The transaction is expected to be completed in March 2014 and is subject to customaryclosing conditions. RLJ made a $10 million non-refundable deposit upon execution of the purchase agreement.
RLJ expects to fund the acquisition of the Hyatt Portfolio through a combination ofvarious financial resources available for use, including but not limited to cash on hand, its undrawn revolving credit facility, and debt financing.
With the addition of the Hyatt Portfolio, RLJ is expected to own 160 properties,consisting of 158 hotels with approximately 24,000 rooms and 2 planned hotel conversions, located in 24 states and the District of Columbia.
About RLJ Lodging Trust
RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust focusedon acquiring premium-branded, focused-service and compact full-service hotels. For more information, please visit www.rljlodgingtrust.com.
About Hyatt Hotels Corporation
Hyatt Hotels Corporation, headquartered in Chicago, is a leading global hospitality company with a portfolio of 12 premier brands and 679 properties in 54 countries, as of September 30, 2016. The Company's purpose to care for people so they can be their best informs its business decisions and growth strategy and is intended to create value for shareholders, build relationships with guests and attract the best colleagues in the industry. The Company's subsidiaries develop, own, operate, manage, franchise, license or provide services to hotels, resorts, branded residences and vacation ownership properties, including under the Park Hyatt®, Grand Hyatt®, Hyatt Regency®, Hyatt®, Andaz®, Hyatt Centric®, The Unbound Collection by Hyatt™, Hyatt Place®, Hyatt House®, Hyatt Ziva™, Hyatt Zilara™ and Hyatt Residence Club® brand names and have locations on six continents. For more information, please visit www.hyatt.com.