Chesapeake Lodging Trust announced Wednesday that it acquired from a subsidiary of HEI Hotels and Resorts the 222-room The Hotel Minneapolis, a Marriott Autograph Collection hotel in Minnesota for US$46 million, or approximately $207,000 per key. HEI will continue to manage the hotel.
The Trust funded the fee-simple acquisition by tapping its undrawn revolving credit facility.
Management estimates a mid-6% cap rate for 2012, ~8% cap rate on 2013 estimates, according to David Loeb, analyst with Robert W. Baird & Co., Milwaukee, Wisconsin. “We view the transaction favorably given attractive growth prospects for a fairly new asset that will need very minimal capex; the hotel continues to ramp to stabilization after being added to the Autograph Collection in mid-2010,” Loeb said.
The space includes approximately 12,000 square feet of leased tenant space. “While we don’t value the tenant cash flow separately from the hotel’s operations, these spaces enhance the cash flow of the property by over 10%,” said James Francis, the Trust’s President and CEO.