BETHESDA, Md –RLJ Lodging Trust (the “Company”) (NYSE: RLJ) today announced that it acquired the fee simple interest in the 124-room, 21c Museum Hotel Nashville (the “Hotel”) for a purchase price of $59.0 million, or approximately $476,000 per key. The property was converted to a boutique lifestyle hotel in 2017, following the transformational conversion of the historic Gray & Dudley Building in Downtown Nashville, Tennessee.
“We are thrilled to acquire this unique, high-quality hotel located in one of the most dynamic, long-term growth markets in the country,” commented Leslie D. Hale, President and Chief Executive Officer. “Nashville is a burgeoning destination that is poised to outperform throughout this cycle and this property is well-positioned to benefit from these growth trends, given that it is located within the heart of demand, in downtown Nashville’s Arts District. This acquisition underscores our disciplined and focused approach to executing off-market transactions.” Ms. Hale continued, “In addition, we took advantage of the market dislocation during the second quarter and repurchased shares at a meaningful discount to our NAV with proceeds from asset sales, accretively. Our significant liquidity and strong balance sheet continues to give us optionality with respect to executing multiple capital allocation opportunities simultaneously.”
The hotel is expected to generate an estimated 8.0% to 8.5% stabilized NOI yield and an accretive stabilized RevPAR nearly double that of the Company’s portfolio. The Company funded the acquisition with existing cash on its balance sheet.
The historic Gray & Dudley Hardware Company Building was built circa 1910 and was converted to a hotel in 2017. The Company plans to continue to have 21c operate the Hotel in affiliation with Accor, offering guests a boutique lifestyle hotel experience, combined with a multi-venue contemporary art museum. The eight-story structure offers over 8,000 square feet (“SF”) of meeting and exhibition space, features the Gray & Dudley restaurant and lounge, outdoor event space, a fitness center, spa, and off-site valet parking. Guest rooms have hardwood floors, high ceilings, large windows, and contemporary luxurious furnishings.
Downtown Nashville – at the core of demand
The Hotel sits at the core of the city’s booming leisure and corporate demand drivers, just three blocks from Broadway, the heart of the entertainment district in Nashville, and in close proximity to Nashville’s major corporate employers such as UBS, AT&T, AllianceBernstein and the Tennessee State Capitol. The property is expected to directly benefit from the new $1.2 billion Oracle campus development, which is projected to generate approximately 8,500 new jobs in Nashville. Across the river from the Hotel is the Nissan Stadium, home of the NFL’s Tennessee Titans and host to Nashville’s many concerts and special events. The property is also expected to benefit from significant redevelopment of the Bankers Alley, further enhancing the area as a vibrant and walkable retail and dining corridor.
Nashville Market – one of the fastest growing metros
Nashville is one of the country’s fastest growing metros, benefitting from population gains and corporate relocations / expansions. The city has nearly 3.0 million SF of Class A office space under construction, about 85% of which is concentrated in the urban core CBD and Midtown submarkets. A number of Fortune 500 companies such as Amazon, Oracle, Bridgestone Americas, iHeartMedia, Mitsubishi, and Nissan North America have presence in Nashville. Major employers are attracted to Nashville given its many high quality educational institutions such as Vanderbilt University, Fisk University, and Tennessee State University.
Nashville’s rich music, sports, and entertainment scene has also made the city one of the fastest growing tourism destinations in the United States, with 16.1 million visitors in 2019. In addition, the city attracts significant conventions and ranked as the #6 convention destination in the country. Strong tourism and convention activity allowed Nashville to achieve compounded average RevPAR growth rate of 8.4% between 2009 and 2019. Supporting the region’s robust growth, Nashville International Airport, which features 21 carriers with over 500 average daily flight departures to nearly 100 destinations, is undergoing a $1.2 billion expansion project that is scheduled for 2023 completion.
Following the acquisition of the Hotel, the Company owns 96 hotels located across 23 states.
Share Repurchases
During the three months ended June 30, 2022, the Company repurchased approximately 4.2 million shares of common stock at an average price of $11.93 per share, or $50.0 million, under its $250.0 million share repurchase program.
Property Snapshot
A brief snapshot of the acquisition with key information may be found in the subsequent pages of this press release and may also be found on RLJ Lodging Trust’s website by following the link: https://investor.rljlodgingtrust.com/webcasts-presentations.
