HOUSTON—SoTHERLY Hotels Inc. has acquired the entity, which owns the Crowne Plaza Houston Downtown Hotel for $30.6 million in cash and 32,929 units of limited partnership interests in Sotherly Hotels LP, plus an additional cash amount for the hotel’s working capital as of the closing date.
The 259-room, upscale, full-service hotel is located in downtown Houston. Chesapeake Hospitality will manage the property.
As a part of the transaction, SoTHERLY Hotels Inc. closed on a $21.5 million loan with Mutual of Omaha Bank collateralized by a first mortgage on the hotel. The loan carries a fixed interest rate of 4.50% and amortizes on a 25-year schedule. The balance of the cash portion of the purchase price was funded by the company with available cash.
Drew Sims, CEO of the SoTHERLY Hotels Inc., stated, “We’re pleased to acquire the Crowne Plaza Houston Downtown. Houston is the largest MSA in the Southern United States and is one of the top performing hotel markets in the country with a healthy economy and tremendous growth prospects. Our predecessor company was involved in the redevelopment of this hotel over a decade ago and we have always hoped to be able to transfer it into the REIT. We believe the Houston asset will be immediately accretive to the company’s earnings.”
For year-end 2013, SoTHERLY Hotels Inc. currently forecasts that the hotel will operate at approximately 72% occupancy, with an average daily rate of approximately $134.50, room revenue per available room of approximately $96.80, hotel earnings before interest, taxes, depreciation, and amortization of approximately $3.2 million, and net operating income after capital reserves of $2.7 million.
Built in 1963 as The Whitehall, the hotel underwent a $25 million redevelopment project and reopened in 2001 as the Crowne Plaza Houston Downtown Hotel. The hotel is ideally located in the downtown central business district and is connected via skywalk to over 2.0 million sq. ft. of office space with tenants such as KBR, Chevron, and United Airlines.