Ashford Hospitality Prime, Inc. has signed an agreement to acquire the 32-story, 415-room Sofitel Chicago Water Tower for $153 million in cash ($369,000 per key), with closing expected in the next thirty days. Located in theGold Coast submarket of Chicago, Illinois, the 415-room, four-star hotel includes over 10,000 square feet of meeting space. The property will continue to be managed by Sofitel.
Ashford intends to finance the property with approximately $80 million of non-recourse mortgage debt. In a statement, Ashford said the purchase price of $153 million represents a trailing 12-month cap rate of 6.0% on net operating income and an EBITDA multiple of 14.1x. On a forward 12-month basis, the purchase price represents a cap rate of 6.8% on net operating income and an EBITDA multiple of 12.7x. In 2013, the Sofitel Chicago Water Tower achieved RevPAR of $182, with 82% occupancy and an Average Daily Rate of $222.
Monty J. Bennett, Ashford Prime’s Chairman and Chief Executive Officer, said: “Its prime location in a major U.S. gateway market fits perfectly with the investment strategy that Ashford Prime was specifically designed to capitalize on. We will look for similar characteristics in acquisition opportunities as we continue to expand the Ashford Prime portfolio.”
The Chicago lodging market has experienced a substantial recovery in the past three years driven by outsized corporate and leisure demand growth with little corresponding supply growth, and continued gains in RevPAR and Average Daily Rate (ADR) are anticipated with occupancy now above prior 2008 peak levels. The nation’s ongoing economic recovery continues to support increased business and leisure travel and Chicago is considered one of America’s most dynamic cities, renowned for its iconic architecture, museums and a blend of urban sophistication and mid-western warmth.
The Sofitel Chicago Water Tower has 415 rooms, including 32 suites and one presidential suite, all featuring Sofitel’s luxurious feathertop and duvet sleep system – SoBed. The hotel has more than 10,000 square feet of meeting space including a 4,592-square-foot ballroom, eight meeting rooms and a private dining room with open kitchen. Additionally, the hotel is home to one of Chicago’s finest restaurants – Cafe des Architectes. Boasting classic French roots, Cafe des Architectes serves contemporary cuisine created with local ingredients, and offers outdoor terrace dining.
Designed by French architect Jean-Paul Viguier, the Sofitel Chicago features a unique knifelike edge on the southern end which extends 33 feet over the sidewalk. The hotel is a 32-floor prism of glass featuring stunning views of Lake Michigan and the Chicago skyline. Its design has garnered the honor of being on the American Institute of Architects list of America’s Favorite Architecture.