NorthStar Realty Finance Corp. (NRF), a property investor and lender, agreed to buy a majority stake in 47 U.S. hotels as part of a $958.5 million deal with Chatham Lodging Trust (CLDT) and Cerberus Capital Management LP.
NorthStar will acquire Cerberus’s 89.7 percent interest in a joint venture for the hotels, known as Innkeepers, while Chatham will retain its 10.3 percent stake, Palm Beach, Florida-based Chatham said today in a statement. The hotel real estate investment trust will take sole ownership of another four properties in the portfolio.
Chatham and Cerberus, a New York-based private-equity firm, bought the hotels that operated under the Innkeepers brand more than two years ago. The lodging industry has since benefited from rising demand in the economic recovery. Revenue per available room in the U.S. rose 7.2 percent in March from a year earlier, according to STR. The occupancy rate was 65.3 percent, compared with 63.5 percent a year earlier.
The 47 hotels, with about 6,100 rooms, are in top metropolitan markets, with the largest concentration of net operating income from properties in California. Eighty-three percent of the hotels are associated with Marriott or Hilton brands, New York-based NorthStar said in a statement.
The $958.9 million represents the venture’s gross purchase price of the 47 hotels. NorthStar is contributing about $213 million of equity for its stake.
Chatham and Cerberus paid $1.02 billion in October 2011 for 64 Innkeepers hotels. The price was less than the $1.12 billion the companies had previously offered after a dispute over whether the deal could be called off because of signs of a slowing economy at the time.
The Bloomberg hotel index rose 17 percent in the 12 months through yesterday, the best-performing REIT group.
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