Hersha Hospitality Trust (NYSE: HT) announced the Company acquired the 115-room Ritz-Carlton in Coconut Grove, Miami, FL for $36.0 million.
“We are pleased to acquire The Ritz-Carlton, Coconut Grove at an attractive basis, capitalizing on recent dislocation in the Miami lodging market. It is exceptional real estate in the highest growth, highest barrier submarket in Miami. Timing is particularly good as the blocks around the hotel are being transformed with high profile luxury residential just across the street, the retail redevelopment of CocoWalk blocks from the hotel, and high quality office development in the Grove. The increasing density in this sought after neighborhood will allow us to drive more profits from the spa, restaurant and bar. The hotel’s impressive meeting space benefits from the growth of the health care, University, and corporate sector in Coral Gables and South Miami. We intend to breathe fresh air into this unique, waterfront urban resort. We will add three rooms, reinvent the restaurant with an exciting new operator, recreate a destination cocktail bar, enhance the spa, and refresh the guestroom experience. Post-renovation, our basis in the hotel will remain well below replacement cost. We have been owners and operators in Miami for five years and own and operate six hotels in the market, and believe the Ritz Coconut Grove offers a great location, a very high quality hotel, and a clear line of sight to increased profitability and a higher profile in the local market,” stated Mr. Neil H. Shah, Hersha’s President and Chief Operating Officer.
The Company funded the acquisition with proceeds from the recent sale of the Residence Inn Greenbelt, MD as part of a tax-deferred like-kind exchange. In addition, the seller of The Ritz-Carlton, Coconut Grove provided financing to the Company with an installment note for $3.5 million. The Company expects The Ritz-Carlton, Coconut Grove to stabilize at an 8.0% – 8.5% yield on gross invested capital.
Mr. Shah continued, “The business plan is similar to the Ritz Carlton Georgetown or The Rittenhouse Hotel in Philadelphia. The Company acquired The Rittenhouse Hotel in March 2012, and undertook capital improvements and local asset management strategies. In addition to five new luxury suites and two additional guestrooms, we introduced The Rittenhouse Spa & Club, and created the Library Bar and the Mary Cassatt Tea Room, and opened the acclaimed restaurant, Scarpetta. From a revenue management perspective, we significantly increased ADR, corporate group business, and direct to consumer digital marketing to position the hotel as the clear RevPAR leader in Philadelphia. For full-year 2017, The Rittenhouse is expected to deliver a 9.2% yield on gross invested capital. As important, we restored its iconic luxury position in the minds of travelers and locals alike. We expect to have similar success in Georgetown and Coconut Grove.”
The AAA Four-Diamond Ritz-Carlton is prominently situated on 3.4 acres, across the street from the Company’s 140-room Residence Inn, and one-half block from the waterfront at the intersection of SW 27thand Tigertail Avenues in Coconut Grove. The hotel is part of a two tower, 22-story residential-hotel condominium complex that opened in 2002. In addition to the hotel’s 115 rooms, the Ritz-Carlton features 14,000 sq. ft. of meeting space, a restaurant, bar, a destination spa, fitness center, retail space, center and approximately 8,000 sq. ft. of leasable office space. The hotel has exclusive rights to 172 of the complex’s 458-space parking deck, pool, as well as all exterior courtyard and event space.
Hersha Hospitality Trust (HT) is a self-advised real estate investment trust in the hospitality sector, which owns and operates high quality upscale hotels in urban gateway markets. The Company’s 53 hotels totaling 7,943 rooms are located in New York, Washington, DC, Boston, Philadelphia, Miami and select markets on the West Coast. The Company’s common shares are traded on The New York Stock Exchange under the ticker “HT”.