by Timothy McQuiston, Vermont Business Magazine RLJ Lodging Trust (NYSE:RLJ) revealed Wednesday that it has sold the 309-room DoubleTree by Hilton Burlington Vermont for $35.0 million. Based on the trailing 12 months ended August 2018, the sales price represents a 17.3x EBITDA multiple and 4.5 percent capitalization rate, inclusive of required capital expenditures.
The buyer is AAM 15 Management, LLC based in Burlington, MA. AAM 15 is a real estate investment and hospitality management firm. Its portfolio includesResidence Inn Burlington in Colchester.
“The sale of Burlington at a highly attractive valuation once again underscores the great strides we have made in harvesting value from the sale of the non-core assets we had identified,” commented Leslie D. Hale, President and Chief Executive Officer. “Since December, the Company has sold approximately $630 million of assets in aggregate at an EBITDA multiple over 16x. We remain on pace to achieve all of our 2018 strategic objectives as we position our portfolio for 2019 and beyond.”
RLJ Lodging Trust, based in Maryland, merged with FelCor Lodging Trust, based in Texas, in August 2017, thus landing what was then the Sheraton Burlington into the hands of RLJ.
The Company estimates the sale of the Burlington will reduce its full year 2018 outlook by the following:
- Pro forma Consolidated Hotel EBITDA by $3 million for the full year
- Adjusted EBITDA by $1 million for the fourth quarter and full year
When the hotel was put on the market last February, its broker,Holliday Fenoglio Fowler, LP (HFF), stated the following in its offering: "Formerly a Sheraton, the hotel is in the process of converting to a DoubleTree by Hilton and is currently undergoing a $4.5 million renovation ($14,563 per key), which includes comprehensive updates to the guest arrival area, the front desk, the entire lobby, and the restaurant and lounge, reducing the renovation needs a new owner would face. Remaining PIP requirements would primarily focus on the hotel’s meeting space, guest rooms and guest bathrooms.
"In 2016, the hotel for sale achieved strong in-place cash flow with net operating income at a 25.8-percent margin. Following the completion of the renovations, and the hotel’s repositioning as an industry leading DoubleTree by Hilton, investors will benefit from significant upside. The hotel is currently brand-managed but is being offered unencumbered of management."
Hotel for Sale Investment Highlights
- Highly Visible Location with Proximity to Demand Drivers: The DoubleTree by Hilton Hotel Burlington & Conference Center is ideally located at the intersection of I-89 and Route 2 and benefits from excellent access and visibility. The hotel is located one mile east of downtown Burlington and Lake Champlain, two miles west of Burlington International Airport and is the closest hotel to the UVM Medical Center and University of Vermont, which, along with several local collages, provides significant room nights through collegiate sporting events, graduations and homecoming weekends. In addition, the hotel benefits by its proximity to Montreal, Canada, and is 45 miles south of the United States-Canadian border.
- Vermont’s Largest Hotel & Conference Center: The DoubleTree by Hilton Hotel Burlington & Conference Center offers a wide amenity set unique within its competitive set. The full-service hotel features 309 guest rooms, a restaurant and lounge, indoor heated pool, fitness center, business center, gift shop and complimentary shuttle service. At 30,000 square feet of event space, the hotel for sale has the largest conference center in Vermont.
- Capex and Brand Conversion: The DoubleTree by Hilton Hotel Burlington & Conference Center has a proven track record for generating strong operating results. The rebranding of the hotel and the change in management would allow a new owner to enhance current revenue streams and achieve significant NOI growth following the completion of the renovations.
- Strong In-Place Cash Flow with Upside: The hotel is currently brand-managed but is being offered unencumbered by management, allowing a new owner complete flexibility in terms of ongoing operating strategy.
Source:BETHESDA, Md.--(BUSINESS WIRE)--RLJ Lodging Trust;Holliday Fenoglio Fowler, LP.