The multi-operator real estate investment trust (REIT), LaSalle Hotel Properties (LHO) disclosed the acquisition of a San Francisco-based property – Serrano Hotel – for $71.5 million. The deal is part of the company’s strategy to capitalize on the opportunities provided by the booming San Francisco lodging market.
LaSalle financed the deal through borrowings from the unsecured senior credit facility. The acquired asset will continue to be operated by Kimpton Hotels and Restaurants.
Calif.-based, Serrano Hotel is positioned at 405 Taylor Street in the center of San Francisco’s Theater District. The property is in proximity to Union Square, The Financial District, Chinatown, Grace Cathedral, Nob Hill, Sony Corporation’s (SNE) Metreon and the Moscone Convention Center. In addition, Serrano Hotel can also benefit from the growing corporate demand in the South of Market and Mid-Market areas driven by technology-related tenants.
With such a locational advantage, the hotel provides several shopping, dining and entertainment choices. It has 236 guest rooms including 19 suites, with 2,553 square feet of meeting space in 5 flexible meeting and banquet rooms.
Notably, San Francisco has been emerging as the one of the top lodging industry markets in the U.S, with improving Revenue Per Available Room and Average Daily Rate trends. This justifies LaSalle’s strategic move to acquire Serrano Hotel.
In fact, this is not the only San Francisco-based asset buyout of LaSalle in recent times. Earlier this month, the company bought 2 properties – Harbor Court Hotel and Hotel Triton – for $47.8 million. We expect these activities to boost the company’s revenues going forward.
LaSalle owns luxury and upper-upscale hotels in high barrier-to-entry markets throughout the U.S. The company specifically focuses on owning, redeveloping and repositioning upscale full-service hotels in urban, resort and convention markets. LaSalle currently owns 11,400 guest rooms in 14 markets across 10 states in the U.S. and the District of Columbia.
LaSalle presently has a Zacks Rank #3 (Hold). Better performing REITs include Hospitality Properties Trust (HPT) and Public Storage (PSA). Both these stocks carry a Zacks Rank #2 (Buy).
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