Chatham Lodging Trust has bought the 96-room Courtyard by Marriott Charleston Summerville in the Nexton community for $20.2 million, or about $210,000 per room, the company said Wednesday.
The West Palm Beach, Florida-based real estate investment trust also has a contract to buy the 96-room Residence Inn by Marriott under construction next door when it opens in the second quarter of 2018, according to its announcement.
The Courtyard opened in October 2014. Chatham said Nexton’s strict building requirements pushed the hotel’s quality and design well past the brand’s prototype standards and that the property will need essentially no additional capital for at least four years.
“This is a high-quality hotel located in Nexton, an emerging mixed-use community that sits in the heart of a rapidly expanding area just outside of Charleston,” said Jeffrey H. Fisher, Chatham’s chief executive officer and president. He said Nexton is projected to include about 10,000 homes, 8 million square feet of commercial space and a medical campus over the next decade.
Fisher pointed to Volvo, which is building its first American factory nearby. He said the 2.3 million-square-foot plant, on nearly 3,000 acres, will employ about 2,000 people and is projected to build 100,000 cars a year.
“Our hotels will be the nicest and closest hotels to the new factory,” Fisher said.
Chief Operating Officer Dennis Craven said the region is more than a vacation spot. “Most people think of Charleston as a purely leisure market, and it has been ranked the top tourist town by Conde Nast for the past five years,” he said. “However, South Carolina, and more specifically the greater Charleston area, already has experienced significant economic expansion and is going to see much more in the future.”
Chatham paid for the hotel with cash from its recent offering of 5 million shares, which raised about $109 million. It estimated that it bought the property at a first-year capitalization rate of about 8% on net operating income. The announcement did not name the seller.
Island Hospitality Management, which is 51% owned by Fisher, will manage the hotel.
Chatham now owns interests in 135 hotels with 18,437 rooms, including 40 hotels it owns outright in 16 states and the District of Columbia, the company said.
