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Moxy Denver Cherry Creek
RLJ Lodging Trust (NYSE: RLJ) today announced that it has acquired the 170-room Moxy Denver Cherry Creek for a purchase price of $51.3 million, or approximately $301,000 per key and completed the disposition of the 764-room DoubleTree Hotel Metropolitan New York City for gross proceeds of $169.0 million.
“We are pleased to acquire the recently built Moxy Cherry Creek Hotel, located within the heart of the exclusive Cherry Creek submarket of Denver, which is expected to generate outsized growth for years to come. In 2021, we successfully acquired three high-quality hotels in top growth markets for nearly $200 million, which will enhance our growth profile throughout this cycle,” commented Leslie D. Hale, President and Chief Executive Officer. “Additionally, we completed the disposition of the DoubleTree Metropolitan at a highly accretive valuation. Overall, we successfully match funded three acquisitions with proceeds from non-core hotel dispositions, which were sold at a multiple that was more than 15 times greater than our acquisitions. We have entered 2022 with substantial investment capacity, which will allow us to continue to execute on both external and internal growth initiatives throughout the year.”
Acquisition of Moxy Denver Cherry Creek
The 170-room Moxy Cherry Creek opened in late 2017 and is expected to generate an estimated 8.0% to 8.5% stabilized NOI yield. The Moxy Cherry Creek is expected to generate a stabilized RevPAR premium of 15% to 20% relative to the Company’s existing portfolio in 2019, with Hotel EBITDA margins that are 600 to 800 basis points higher. The Company has engaged the highly respected, Denver-based Sage Hospitality Group to manage the Moxy Cherry Creek. The Company funded the acquisition with the combination of corporate cash and the assumption of $25.0 million of non-recourse secured debt. The seller is BMC Investments, a leading Denver-based fully integrated and experienced developer of high-quality commercial real estate throughout the United States.
The Hotel is one of five hotels located within the core upscale Cherry Creek North neighborhood of Denver, with over 100 retail shops and 50 restaurants situated within a four-block radius of the property. The Hotel features amenities such as the signature Moxy Bar and the Cherry Creek Beer Garden in addition to meeting rooms, outdoor event space, complimentary bike rentals and a state-of-the-art fitness center.
Cherry Creek is Denver’s top upscale, lifestyle submarket that is seeing significant growth in office space, residential units and development of mixed-use projects, which will continue to support this area’s growth. Cherry Creek North hotels typically generate an ADR premium above comparable hotels located in Downtown Denver.
Denver is one of the country’s fastest growing metro areas that is benefitting from population growth and corporate relocations / expansions. The City’s “quality of life” attributes and outdoor lifestyle has led to an 18% increase in its residents, especially Millennials, over the past decade and the area continues to attract companies such as Amazon, Apple, Palantir, Robinhood and Zoom, among others. Denver is also home to a diversified base of industries which include a number of Fortune 500 companies. Employment and population growth trends in Denver are projected to continue to outperform the national average over the next several years. Denver remains a top destination, hosting nearly 18 million overnight visitors in 2019, and is also an emerging meeting destination. Benefitting from the area’s growth, Denver’s RevPAR grew 70 basis points ahead of the Top-25 U.S. Markets per STR from 2015 to 2019, on a compounded annual growth rate (“CAGR”) basis.
Marriott’s Moxy brand combines comfort with a bold, stylish, industrial design and a modern, relaxed feel, which has garnered appeal among a broad range of customer segments, including Millennials, who are increasingly looking for a vibrant, lifestyle / boutique experience-driven hotel stay. Since the first Moxy opened in 2016 in the U.S., the brand has continued to grow at a healthy pace. This growth is being driven by the brand’s strong track record of performance, combined with an efficient operating model and affiliation with the lodging industry’s premier guest loyalty rewards program – Marriott’s Bonvoy.
Disposition of the DoubleTree Hotel Metropolitan New York City
The Company recently closed on the previously announced disposition of the 764-room DoubleTree Metropolitan, for a gross sales price of $169.0 million, which represents a highly accretive multiple of over 47 times this property’s 2019 Hotel EBITDA. Following this disposition, the Company currently owns two hotels in New York City, representing approximately 550 rooms and less than 3.5% of the Company’s pro forma 2019 Hotel EBITDA.
RLJ Lodging Trust is a self-advised, publicly traded real estate investment trust that owns primarily premium-branded, high-margin, focused-service and compact full-service hotels. The Company's portfolio currently consists of 97 hotels with approximately 21,500 rooms, located in 22 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.