The six-story hotel is located in downtown Phoenix and includes the historic Fuller Paint Company Building that houses the hotel’s public spaces, including a signature food & beverage outlet.
Chatham funded the purchase using proceeds from the sale of the Denver Tech hotel in the first quarter and available cash. The hotel will be managed by Island Hospitality Management, which is owned by Fisher.
Upon stabilization, the acquisition is expected to produce RevPAR in excess of $150 and generate an estimated NOI yield of more than 9%.
“We are really excited about this beautiful, brand new, high-quality hotel located in the heart of downtown Phoenix, a market in the early stages of the type of renaissance we have seen occur in other large urban downtowns across the country over the past decade,” said Jeffrey H. Fisher, CEO/president, Chatham. “Phoenix and Maricopa County-at-large have benefited immensely from population growth over recent years. In fact, the area experienced the largest population growth of any county in the country in 2022. Phoenix ranks best in the country for talent attraction and generally ranks among the top markets in the country for real estate investment growth and future job growth. The hotel enters a thriving lodging market as Phoenix has experienced the second-highest RevPAR CAGR over the past five years. This is the only Hilton-branded extended-stay hotel in downtown Phoenix and will benefit from the diverse demand generators, all of which are in a high-growth phase.”
The Home2 Suites is the closest hotel to the Footprint Center (home to the NBA Phoenix Suns and WNBA Phoenix Mercury) and Chase Field (home to the Arizona Diamondbacks). It is also blocks away from the Phoenix Convention Center and adjacent to the Warehouse District.
“This is Chatham’s first acquisition in more than two years and fits our long-term growth strategy to acquire younger, premium-branded, high-quality hotels in infill locations with diverse demand generators,” said Fisher. “The hotel further diversifies our portfolio by adding an underrepresented geographic area and also increases our exposure to segments of travelers other than purely business transient. Selling our Denver Tech hotel for $24 million, inclusive of deferred renovation costs, at a yield of approximately 4% and recycling that capital into a brand-new asset that will yield over twice that investment is a great trade for us. This hotel will enhance our RevPAR and operating margins, be accretive to FFO per share, increase distributable cash flow and enhance shareholder value.”
Tags: Chatham Lodging trust, Home2 Suites by Hilton Phoenix Downtown, Island Hospitality Management, Jeffrey H. Fisher
