Chesapeake Lodging Trust (NYSE: CHSP)) announced today that it has closed on the previously announced acquisition of the newly developed, 185-room Hyatt Place New York Midtown South located in New York, New York for a purchase price of $76.2 million, or approximately $412,000 per key. The Trust entered into an agreement with Real Hospitality Group, the operator of the Trust’s other hotel in New York located in Midtown on 31st Street, to manage the hotel.
James L. Francis, Chesapeake’s President and Chief Executive Officer, stated, “We are very pleased to acquire our second hotel in the highly desired Midtown area of Manhattan at a very compelling per key price. Similar to the Holiday Inn New York City Midtown – 31st Street, which we acquired in late December 2011 and opened for business in January 2012, we expect the Hyatt Place to ramp-up very quickly given the robust demand in Manhattan, the strength of the Hyatt brand, and our operator’s extensive experience managing hotels in New York City."
The Trust funded the acquisition with available cash on hand, a credit at closing equal to the outstanding balance of a construction loan provided to the seller, and a $35.0 million advance under the Trust’s $60 million term loan obtained in July 2012. The $35.0 million advance bears interest equal to LIBOR, plus 3.25%. Contemporaneous with the $35.0 million advance, the Trust entered into an interest rate swap to effectively fix the interest rate on the $35.0 million advance for the remaining initial term of the loan at 3.65% per annum. Under the terms of the interest rate swap, the Trust pays fixed interest of 0.40% per annum on a notional amount of $35.0 million and receives floating rate interest equal to the one-month LIBOR.
Chesapeake Lodging Trust is a self-advised lodging real estate investment trust (REIT) focused on investments primarily in upper-upscale hotels in major business and convention markets and, on a selective basis, premium select-service hotels in urban settings or unique locations in the United States. The Trust owns 16 hotels with an aggregate of 4,907 rooms in seven states and the District of Columbia.
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