Tech companies aren't just office space users--they're important to the Seattle-area hospitality industry. When gearheads come to town for stints at Microsoft or other tech companies, they have to stay somewhere. (Contrary to its realistic looks, you can't actually live inside World of Warcraft.)
Chatham Lodging chief investment officer Peter Willis tells us that when the opportunity arose to acquire the Residence Inn in downtown Bellevue, the company jumped on it, paying nearly $72M for the 231-room property. "It's a strong flag in the extended-stay segment," says Peter, who adds that the local market is underserved by this kind of property. "What's really attractive about the property is its location near high-growth tech companies, who consistently need rooms to house people who come for training or another extended-stay purpose," he says. (So it's true, techies do sleep.)
Chatham is no stranger to the Puget Sound area. The company already owns four Residence Inns in the market in a JV with Innkeepers USA (Island Hospitality's operates the properties), and it's looking for more acquisitions. "We have a deep pipeline of prospective targets and intend to use our balance sheet to acquire hotels that meet our underwriting criteria," Peter notes. The company bought its latest acquisition at a cap rate of 7.8%. Year-to-date through Sept. 30, RevPAR at the property is up 13% to $131, according to Peter.
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