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Real Estate - SEPTEMBER 10, 2019

Apple Hospitality REIT buys seven hotel projects for $216m

by Andrea Zander

Apple Hospitality REIT has seven hotels under contract for acquisition for a total expected purchase price of $216 million.

All the hotels are under construction. The assets include the Hyatt Place and Hyatt House in Tempe, Ariz., the Hampton Inn & Suites and Home2 Suites in Cape Canaveral, Fla., and the Courtyard in Denver.

In July, it entered into a purchase contract for a Hilton Garden Inn to be built in Downtown Madison, next to the University of Wisconsin-Madison for approximately $50 million. This expected 176-room nonprototypical urban asset will have a 250-space parking deck, generous meeting and pre-function space, and other amenities to offer visitors to the hotel, the university and surrounding businesses. The firm expects the hotel will be completed in late 2020 or early 2021.

Also in July, Apple Hospitality REIT entered into a contract for the potential purchase of an existing independently owned and operated 55-room boutique hotel in downtown Richmond, Va. The hotel is located in the Shockoe Slip area of Richmond, four blocks from the REIT’s headquarters and a block from its Courtyard and Residence Inn hotels. The purchase price is approximately $7 million, and it anticipates that after renovating and repositioning the hotel, the cost will be well below replacement value. The firm plans to operate the hotel as an independent property, and leverage its operational expertise to structure the services and amenities to be consistent with its rooms-focused portfolio.

“The acquisition is a unique, low-risk opportunity to gain additional insight into what drives consumer preferences, royalty and guest satisfaction at independent and boutique hotels, within the comfort of a market that we know well,” said Kelly Clarke, vice president, investor relations at Apple Hospitality REIT, during the recent second quarter 2019 earnings call. “We remain committed to proactively evaluating and responding to industry trends. And this potential acquisition is an attractive opportunity to learn new things and use our scale and expertise to leverage those takeaways to improve the appeal and performance of our branded portfolio and inform our interactions within the broader scope of our industry influence.”

Once all completed, it will add a total of 891 guest rooms to Apple Hospitality’s portfolio, which currently consists of 234 hotels with more than 30,000 guest rooms located throughout 34 states.

 

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