Wednesday, May 4, 2011
Company Acquires Five Premium Hotels; Invests in Joint Venture with Cerberus
PALM BEACH, FL, May 4, 2011 - Chatham Lodging Trust (NYSE: CLDT), a hotel real estate investment trust (REIT) focused on investing in upscale extended-stay hotels and premium-branded select-service hotels, today announced that it was the successful bidder in two separate and distinct bankruptcy court auctions resulting in aggregate investments by Chatham of over $230 million, doubling Chatham’s current investments.
As announced yesterday, a joint venture formed by Cerberus Capital Management and Chatham was selected as the winning bidder in the bankruptcy court auction related to 64 of Innkeepers USA Trust (the Sellers) hotels.
Under the terms of the winning bid, Cerberus and Chatham will be the plan sponsors to acquire the hotels for a total purchase price of approximately $1.125 billion, including the assumption of debt through a plan of reorganization. Chatham will fund its investment in the joint venture with available cash and borrowings under Chatham’s secured revolving credit facility.
Residence Inn Anaheim Garden Grove, CA, 200 rooms (top left photo);
Residence Inn San Diego Mission Valley, CA, 192 (top right photo)
Residence Inn Tysons Corner, VA, 121 (middle left photo)
Doubletree Guest Suites Washington D.C., 105 (middle right photo)
The five-hotel acquisition will be funded through the assumption of five individual loans amounting to $134.2 million at a weighted average interest rate of 6 percent and a maturity date in 2016 with the remainder funded from borrowings under Chatham’s secured revolving credit facility.
Including acquisitions under contract, Chatham’s portfolio will comprise 19 wholly owned hotels with 2,588 rooms/suites in 10 states, a 57 percent increase in room count over its existing portfolio.
Barclays Capital served as exclusive financial advisor and Wachtell, Lipton, Rosen & Katz served as exclusive legal advisor to Chatham for the transactions.
The Sellers have scheduled a hearing to approve the Plan of Reorganization for June 23, 2011, and assuming the Confirmation Order is entered into at such time, Chatham would expect to close shortly thereafter.
The amendment provides for an increase to the allowable consolidated leverage ratio to 60 percent through 2012, reducing to 55 percent in 2013; and a decrease to the consolidated fixed charge coverage ratio from 2.3x to 1.7x through March 2012, increasing to 1.75x through December 2012 and 2.0x in 2013.
Participating lenders for the secured line of credit include Barclays Capital, Regions Capital Markets, Credit Agricole Corporate and Investment Bank, UBS Securities and US Bank National Association.
“We appreciate the continued support of our lenders and shareholders as we look to build Chatham into the premier owner of upscale extended-stay and premium branded select-service hotels,” said Dennis M. Craven, Chatham’s chief financial officer.
“Although this transaction increases our overall leverage higher than our targeted 35 percent, we are comfortable with temporarily increasing our leverage at this early stage of the lodging cycle recovery to take advantage of these opportunities.”
Jerry Daly, Carol McCune, (Media) Daly Gray Public Relations, (703) 435-6293 firstname.lastname@example.org
Dennis Craven, (Company) Chief Financial Officer, (561) 227-1386