WEST PALM BEACH, FLA.- Chatham Lodging Trust, a hotel real estate investment trust (REIT) focused on investing in upscale, extended-stay hotels and premium-branded, select-service hotels, announced that the company has acquired the beachside 111-room Hilton Garden Inn Destin Miramar Beach, Fla., in an off-market transaction for $31 million, or approximately $279,000 per room. Recently opened in 2020, the hotel is within walking distance of the pristine white sands of the Gulf of Mexico. The hotel’s location in Miramar Beach is well situated in relation to the thriving Santa Rosa Beach and Destin markets. The acquisition should generate an estimated stabilized NOI yield of 8.0% to 8.5%.
“As discussed on our 2021 year-end conference call, we emerged from the pandemic with a stronger balance sheet, as well as the capacity to make accretive acquisitions in terms of both earnings and asset value,” highlighted Jeffrey H. Fisher, Chatham’s chief executive officer and president. “This hotel will generate strong cash flow from the outset, represent our third youngest hotel and generate a 2022 RevPAR premium of approximately 50 percent over our current portfolio. Additionally, the hotel diversifies further Chatham’s portfolio by adding a predominantly leisure hotel and also expands our presence in the Sunbelt, which we believe will continue to benefit from population growth. In fact, three out of every four travelers to the Destin area come from the Sunbelt, and many of Destin’s feeder markets, such as Atlanta, Dallas, Nashville and Houston, are experiencing strong population growth.”
The Hilton Garden Inn Destin Miramar Beach is a high-quality hotel with rooms that include a microwave and small refrigerator, 27 of which are enhanced with Gulf-view balconies. The hotel also features an expansive public space that includes a state-of-the-art meeting room and/or event space with approximately 900 square feet, a modern fitness center and a gorgeous bar that uniquely offers over 60 different whiskies and other premium spirits.
“Although the hotel will primarily serve leisure travelers, the property sits across the street from the Silver Sands Outlet stores and benefits from corporate demand. The Hilton Garden Inn also receives a strong amount of military demand related to Eglin Air Force Base, the country’s largest air force base and home to 38,000 personnel, as well Hurlburt Field, which employs 8,000 and is home to the Air Force Special Operations Command Center. We are excited to add this great hotel to our portfolio, and we will continue to recycle capital out of older assets into newer hotels with higher growth prospects,” Fisher concluded.
Chatham funded the purchase using available cash and borrowings under its credit facility. The hotel will be managed by Island Hospitality Management, which is owned by Fisher.