Chesapeake Lodging Trust Acquires The Royal Palm-Miami South Beach
March 09 2015 - 11:16AM
Business Wire
Chesapeake Lodging Trust (NYSE:CHSP) (the “Trust”) announced
today that it has closed on the previously announced acquisition of
The Royal Palm located in Miami Beach, Florida for a purchase price
of $278.0 million, or approximately $707,000 per key. The Trust
entered into a new management agreement with HEI Hotels &
Resorts to operate the hotel and a new franchise agreement with
Starwood Hotels & Resorts (“Starwood”) and will be affiliated
with Starwood’s new brand for independent hotels.
“We are thrilled to announce our entrance into the Miami-South
Beach market with the fee simple purchase of The Royal Palm,”
commented James L. Francis, Chesapeake Lodging Trust’s President
and Chief Executive Officer. “We have been looking for the right
situation and are delighted to have found a high-quality, fully
renovated asset in an outstanding location and with tremendous
operational upside.”
The Royal Palm enjoys a best-in-market location at Collins
Avenue and 15th Street, in the heart of South Beach fronting the
Atlantic Ocean. The iconic Art Deco property contains 393
guestrooms averaging approximately 426 square feet, including 164
suites and 141 rooms offering ocean views. The hotel has an
attractive mix of 229 standard rooms ranging from 312 to 330 square
feet which includes 73 double/double bedded rooms. The suites range
from approximately 500 square feet to the 1,200 square feet
two-bedroom apartment suites. Each generously sized room offers a
contemporary open layout with upscale residential elements and a
42-inch flat screen television, wireless HSIA, custom artwork, and
a comfortable work or dining area.
The hotel features several food and beverage outlets for guests
and visitors to enjoy, spread throughout the resort. The Florida
Cookery is the hotel’s three-meal restaurant and serves regional
Florida cuisine offering both indoor and outdoor options. The lobby
lounge bar features light fare with a focus on cocktails at night
and transforms into a coffee bar during the daytime. The South
Shore lounge is located on the ground floor of the Lanai building
and offers a full bar and a small plates menu.
Byblos, The Royal Palm’s featured restaurant, is located on the
first two floors of the hotel’s Shorecrest building. The
Mediterranean cuisine concept is operated by INK Entertainment via
a 10-year lease arrangement with the hotel. Byblos is currently
under construction by the tenant with a planned opening in April
2015. The two-story space features 150 restaurant and bar seats, a
30-seat outdoor patio, and a 2,000 square foot private dining and
lounge room that can be used for flexible meeting space and private
events.
The hotel has approximately 5,700 square feet of dedicated
meeting and banquet space throughout six different meeting areas,
including the 2,600 square foot Great Room which can accommodate up
to 300 guests. There is also an additional 16,000 square feet of
flexible outdoor meeting space via multiple patios and decks. Other
amenities include a full-service spa, a fitness center, two
separate swimming pools, and access to a private Royal Palm beach
area with 300 chaise lounges and day beds along with beach side bar
services.
From 1998 through 2002, The Royal Palm underwent a major
redevelopment and reconstruction project to bring the resort up to
modern building codes and standards, including the construction of
the two 17-story towers, resulting in the nearly 400 rooms enjoyed
today. Starting in 2010 and completing in late 2012, a
comprehensive renovation with a cost of approximately $50 million
was completed.
“The hotel is in excellent shape and conveys the contemporary
feel of South Beach,” continued Mr. Francis. “We will execute upon
our business plan that includes minor changes to the product
offering, but we anticipate no disruption as we reposition the
property.”
HEI Hotels and Resorts became the hotel’s new manager at closing
of the acquisition. “The Chesapeake and HEI partnership has
demonstrated an ability to quickly improve operating efficiencies
at other hotels that we own and we see no reason that this proven
track record will not continue to show successful results at The
Royal Palm,” said Mr. Francis. HEI currently manages approximately
1,200 rooms for the Trust and one of its restaurants at the W
Chicago - Lakeshore.
The Trust has entered into an interim franchise agreement with
Starwood, under its Luxury Collection brand. The Royal Palm will
then migrate to Starwood’s new brand upon its roll out and will be
the first in this new soft brand which is anticipated to occur
within the next 60-90 days. “We are excited to immediately enjoy
the top-line benefits of Starwood’s high-end customer base and SPG
program,” said Mr. Francis. “South Beach is largely a non-branded
marketplace and by affiliating with Starwood, we will continue to
enjoy the flexibility of providing independent services and
operating standards, yet benefit from the incredible strength of
our good partner’s global reservation system, distribution channels
and powerful loyalty program.”
The Trust funded the acquisition with available cash on hand, a
borrowing under its revolving credit facility and by obtaining a
$125.0 million two-year term loan. The term loan was provided by
Wells Fargo Bank, N.A., and subject to customary conditions,
provides for a one-year extension. The loan is secured by The Royal
Palm-Miami South Beach and bears interest equal to LIBOR, plus
2.40%. Contemporaneous with the closing of the term loan, the Trust
entered into an interest rate swap to effectively fix the interest
rate for the original two-year term at 3.34% per annum.
ABOUT CHESAPEAKE LODGING TRUST
Chesapeake Lodging Trust is a self-advised lodging real estate
investment trust (REIT) focused on investments primarily in
upper-upscale hotels in major business and convention markets and,
on a selective basis, premium select-service hotels in urban
settings or unique locations in the United States. The Trust owns
21 hotels with an aggregate of 6,509 rooms in nine states and the
District of Columbia. Additional information can be found on the
Trust’s website at www.chesapeakelodgingtrust.com.
Chesapeake Lodging TrustDouglas W. Vicari, 410-972-4142
Chesapeake Lodging (NYSE:CHSP)
Historical Stock Chart
From Aug 2024 to Sep 2024
Chesapeake Lodging (NYSE:CHSP)
Historical Stock Chart
From Sep 2023 to Sep 2024