Chesapeake Lodging Trust has agreed to sell two Hyatt-branded Manhattan hotels totaling 307 keys for a combined price of $138 million, or about $450,000 per key. The proposed sale to an undisclosed buyer is expected to occur in mid-to-late September, before the trust completes its prospective $2.7 billion merger with Park Hotels & Resorts Inc. The deal includes the 122-key Hyatt Herald Square New York and the 185-key Hyatt Place New York Midtown South.
The trust acquired the asset in Midtown Manhattan’s Herald Square neighborhood for $52 million in December 2011 and teamed up with Hyatt Hotels & Resorts to convert and rebrand the property. The new upscale Hyatt Herald Square New York at 30 W. 31st St. opened in September 2014. After picking up the second hotel in March 2013 for $76.2 million, the trust opened the asset at 52 W. 36th St. in the same month, marking the city’s first Hyatt Place property. The aggregate sale price for the two hotels represents a trailing 12-month net operating income cap rate of 5.9 percent, according to a statement by the company.
Offloading non-core assets
Park Hotels & Resorts, the second-largest lodging REIT, will acquire Chesapeake Lodging Trust under the terms of a merger agreement announced in May. The deal called for the pre-closing disposal of non-core assets, including the pair of New York City hotels as well as three Park properties currently under contract.
Chesapeake’s current collection of 20 hotels totals 6,288 keys in eight states and Washington, D.C. Following the merger—which remains subject to receipt of the required approval of the trust’s shareholders and completion of other customary closing requirements and conditions—the combined company will own a 35,383-key portfolio of 66 assets, with an estimated enterprise value of $12 billion.