The multi-operator real estate investment trust (REIT) – LaSalle Hotel Properties (LHO) – is on an acquisition spree. Last month, the company acquired as many as six premium properties in some of the booming U.S. lodging markets. This comprised three properties each in Florida and California, with the most recent one being the Florida-assets buyout. These acquisitions have been financed with borrowings from LaSalle’s senior unsecured credit facility.
Florida Hotels Acquisition
Most recently, LaSalle purchased the Southernmost Hotel Collection (260-room) – consisting of Southernmost on the Beach, Southernmost Hotel in the U.S.A. and La Mer Hotel & Dewey House – in Key West for $184.5 Million. The assets are located directly in the Atlantic Ocean and are in proximity to Key West International Airport.
With a year-round temperate climate and low supply growth, the Key West lodging market is flourishing and has become one of the major lodging markets of the U.S. According to Smith Travel Research, Key West registered a compound annual growth rate (CAGR) of Revenue Per Available Room (RevPAR) of 10% from 2009–2012, compared to 6.8% growth accounted in overall U.S. industry. Notably, Key West’s RevPAR CAGR, over a 25-year span through 2012, was ranked the second highest among LaSalle’s core markets.
California Hotels Acquisition
Moreover, last month, LaSalle acquired three properties – Serrano Hotel (236-room), Harbor Court Hotel (131-room) and Hotel Triton (140-room) – in San Francisco for total purchase price of $119.3 million. All the hotels, which are in proximity to San Francisco’s financial district, continue to be operated by Kimpton Hotels and Restaurants.
Notably, San Francisco has been emerging as one of the major lodging industry markets in the U.S., with improving RevPAR and Average Daily Rate trends.
Conclusion
We remain upbeat about LaSalle’s strategic moves that are aimed at strengthening its portfolio base of luxury and upper-upscale hotels in high barrier-to-entry markets throughout the U.S. The company currently owns 11,400 guest rooms in 14 markets across 10 states in the U.S. and the District of Columbia. The strong portfolio positions it well to ride on the growth trajectory going forward.
LaSalle presently has a Zacks Rank #3 (Hold). Better performing REITs include Hospitality Properties Trust (HPT), CubeSmart (CUBE) and SL Green Realty Corp (SLG). All these stocks carry a Zacks Rank #2 (Buy).
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