Rlj Lodging Trust Acquires AC Hotel by Marriott Boston Downtown for $89m
RLJ Lodging Trust (the "Company") (NYSE: RLJ) announced that it has acquired the fee simple interest in the recently constructed 205-room AC Hotel by Marriott Boston Downtown (the "Hotel") for a purchase price of $89.0 million, or approximately $434,000 per key. The purpose-built hotel opened in 2018 and is located within the mixed-use Ink Block development in Downtown Boston. Upon stabilization the Hotel is expected to generate 7.5% to 8.0% NOI yield. The Company funded the acquisition with existing cash on its balance sheet.
"We are pleased to expand our footprint in Boston Downtown by acquiring this recently-built asset in the heart of Boston's fast-growing, life sciences and technology core," commented Leslie D. Hale, President and Chief Executive Officer. "We are confident that the addition of this Hotel will enhance our portfolio's growth profile throughout this cycle and fits our investment thesis of buying premium-branded hotels within growth markets. This off-market acquisition also demonstrates our team's ability to source attractive opportunities at discounts to both replacement cost and pre-COVID pricing. Our strong balance sheet positions us extremely well to continue to pursue additional external growth opportunities."
The AC Hotel Boston Downtown is located within the newly developed Ink Block hub, a vibrant mixed-use development nestled in Boston's South End neighborhood. The Ink Block development transformed the site of the former Boston Herald headquarters. As the only hotel in the four-phase development, the property is well-positioned to benefit from the significant growth of office and life science laboratory space in the immediate area. As of the second quarter of 2021, approximately 4 million square feet ("SF") of office space and 1.7 million SF of laboratory space was under development within close proximity to the property. The Hotel is also well-positioned to benefit from its proximity to two of the city's top hospitals, Tufts Medical Center and Boston Medical Center. The Ink Block development is adjacent to the fast-developing Seaport District, which is home to a diverse base of corporate demand generators including Amazon, General Electric, Gillette, Reebok, PwC, Roche, Fidelity, AstraZeneca, and Vertex.
Boston is expected to be one of the highest lodging demand growth markets in the country and is poised to benefit from the growth of life sciences, healthcare, technology, finance, education, and government sectors, as well as tourism and conventions. In 2019, Boston achieved the 5th highest Revenue per available room ("RevPAR") of the Top 25 lodging markets in the United States. Additionally, Boston benefits from significant inbound domestic and international travel, with Boston's Logan International Airport experiencing record-breaking volume of 42.5 million passengers in 2019. Anchored by two large convention centers, Boston is a top destination for group events and also benefits from leisure demand associated with major sporting events.
The AC Hotels by Marriott lifestyle brand features modern, purposefully designed spaces and guestrooms that attract both business and leisure guests. The AC Hotel by Marriott Boston Downtown offers sleek furnishings, curated artwork, and intuitive technology. Hotel amenities include the AC Lounge bar, AC Kitchen, AC Store, state-of-the art fitness center, approximately 2,500 SF of flexible and customizable meeting space, outdoor patios, on-site parking, as well as car charging stations.
With the acquisition of the AC Hotel Boston Downtown, the Company now owns three hotels in the Boston market and is expanding its overall brand collection to include lifestyle brands.