RLJ Lodging Trust on Thursday announced it sold the 182-room Hilton Mystic in Connecticut for approximately US$14.1 million, or $77,200 per key, to Distinctive Hotel Group (DHG), a privately held, Natick, Massachusetts-based owner-operator.
DHG, which owns and manages five other New England properties, reportedly plans to undertake a major renovation of the four-story hotel, which will retain the Hilton flag.
The sale price of the non-strategic asset represents approximately a 7.4% capitalization rate on the hotel’s projected 2014 net operating income, adjusted for approximately US$4.5 million of pending capital expenditures.
“We continue to focus on creating value by recycling capital from non-strategic asset sales into higher-yielding acquisitions,” said RLJ President and CEO Thomas Baltimore Jr. “Our capital-recycling program remains active. Over the last five months we have sold 14 non-strategic hotels for over US$115 million. As we continue to enhance our portfolio, we will remain disciplined in the selection and execution of all asset sales.”
The 2013 RevPAR for the hotel represents a discount of approximately 18% to the company’s reported 2013 pro forma RevPAR. RLJ said the sale further enhances the company’s growth profile and provides additional capital to be redeployed into coastal and gateway markets that is expected to translate into increased shareholder value.
With the sale of this hotel, RLJ owns 146 properties consisting of 144 hotels with approximately 22,400 rooms and two planned hotel conversions.