Driving Up Dispositions
Public REITS Re-Evaluate Portfolios, Options Moving Forward
A significant number of hotels have changed hands or are poised to do so as several large owners, led primarily by publicly traded REITs, re-evaluate their portfolio strategies and look to maximize shareholder value while taking advantage of market conditions.
Apple Hospitality REIT (Real Estate Investment Trust)—which has more than 200 properties in its portfolio—has agreed to sell 20 select-service hotels to a joint venture between Flynn Properties, Inc. and Varde Partners. The deal—which includes Marriott and Hilton branded properties—is for $211 million. It includes properties in the Sunbelt, Northeast, Pacific Northwest and Midwest, in need of capital improvements.
Meanwhile, CorePoint Lodging announced during its quarterly report that it is exploring new strategic alternatives moving forward, including a potential sale of the company or other transactions.
The REIT—which is concentrated on select-service midscale and upper midscale hotels—has already been disposing of non-core assets as part of its portfolio, which previously included some 210 hotels. Year to date, the company has sold 42 hotels for $229 million in gross proceeds and has an additional 37 hotels under contract, expected to generate $234 million in gross proceeds.
The company sold 25 hotels during the second quarter for $143 million in total gross proceeds and sold an additional eight hotels subsequent to the end of the quarter.
Furthermore, Chatham Lodging Trust—a hotel real estate investment trust (REIT) focused on investing in upscale, extended-stay hotels and premium-branded, select-service hotels—in an off-market transaction has acquired two hotels for $71.2 million, or approximately $265,000 per room. The acquired hotels include the 132-room Residence Inn Austin Domain and the 137-room TownePlace Suites Austin Domain.
Meanwhile, Peachtree Hotel Group, a real estate private equity investment firm, noted that it has acquired more than $1 billion in stressed and distressed real estate assets since June 2020.
“We have capitalized on the dislocation created by the pandemic with investments in assets at a lower cost basis than pre-pandemic pricing,” said Greg Friedman, CEO, Peachtree in a press release. “Our strategy of opportunistically pivoting as the markets change allows us to capitalize on investments during any cycle.”
Peachtree has focused on investing in opportunistic real estate in distressed, under-capitalized or underperforming hospitality assets throughout the U.S. because of the disruption in the economic environment brought on by the pandemic. The company acquired, operated and disposed of equity interests during this period and invested in preferred equity, debt or debt-like positions in primarily premium-branded, limited- and select-service hotels.