Dive Brief:
- Florida-based hotel real estate investment trust Chatham Lodging Trust acquired the recently opened 148-room Home2 Suites by Hilton Phoenix Downtown for $43.3 million, or approximately $293,000 per room.
- The extended stay hotel buy marks Chatham’s first acquisition in more than two years, according to CEO Jeffrey Fisher. The trust funded the purchase using proceeds from the $24 million sale of its Denver Tech Center hotel in the first quarter of this year.
- With the buy, Fisher said the trust carries out its “long-term growth strategy to acquire younger, premium-branded, high-quality hotels in infill locations with diverse demand generators.” Other extended stay players have said local infrastructure projects are driving demand for the product type in the Phoenix market.
Dive Insight:
According to Fisher, Chatham’s Home2 Suites by Hilton Phoenix Downtown acquisition will enhance the trust’s RevPAR and operating margins. Upon stabilization, the acquisition is expected to produce RevPAR in excess of $150 and generate an estimated net operating income yield over 9%.
With the buy, Chatham also adds an “underrepresented geographic area” to its portfolio and “increases [its] exposure to segments of travelers other than purely business transient,” Fisher said, noting that the Home2 Suites is the closest hotel to the Footprint Center, home to the NBA’s Phoenix Suns and WNBA team Phoenix Mercury.
According to Visit Phoenix, more than 2 million people come to Footprint Center each year for entertainment and sports events.
The overall population growth in the Phoenix area in recent years, bolstered by talent attraction and real estate investment growth, has also benefited the market’s hospitality industry, Fisher noted.
Other extended stay players are also eyeing the Phoenix market due to the local infrastructure projects generating demand after the Biden administration passed a $1.2 trillion infrastructure bill in 2021.
Paul Duncan, chief development officer at West77 Partners, the developer behind extended stay brand LivAway Suites, told Hotel Dive in April the developer is targeting Phoenix for future extended stay projects. He said the Taiwanese semiconductor manufacturing company TSMC is working on a $40 billion infrastructure project in the market that’s expected to generate extended stay demand from its construction workers.
Joe Blewitt, senior vice president of hospitality at development company Jackson-Shaw, also said the TSMC project is driving hotel demand in Phoenix, making it a desirable market for the developer’s dual-branded AC Hotel by Marriott and Element by Westin that’s underway.
