Host Hotels & Resorts bought the 215-room 1 Hotel Nashville and 506-room Embassy Suites by Hilton Nashville Downtown for $530 million in an all-cash deal.
The Bethesda, Maryland-based hotel real estate investment trust said in a news release that the price represents a 12.6-times earnings before interest, taxes, depreciation and amortization, or a capitalization rate of approximately 7.4% on the property's estimated 2024 results.
The sellers of the properties were Starwood Capital Group, Crescent Real Estate and High Street Real Estate Partners.
1 Hotels is a brand under SH Hotels & Resorts, which is the operator of the 1 Hotel Nashville. Starwood Capital owns SH Hotels & Resorts. Davidson Hospitality Group operates the Embassy Suites property.
Host Hotels expects the hotel will be among its top 25 properties based on estimated full-year results. It has an expected combined revenue per available room of $275, total RevPAR of $435 and EBITDA per key of $58,550.
Host President and CEO James Risoleo said in the release REIT executives are excited to add both properties to the portfolio. The property, built in 2022, has a prime location in Nashville, a top-performing market, which had a RevPAR compound annual growth rate of 7.7% from 2000 to 2023, even while absorbing new supply.
Risoleo also cited the popularity of Nashville as a leisure destination and its No. 2 ranking as a convention destination in the U.S.
"With meaningful in-place cash flow, multiple demand generators and no expected near-term capital expenditure requirements, we expect the property will generate outsize growth as it stabilizes, enhancing the quality of our portfolio and driving additional value creation for our stockholders," he said.
Together, the two hotels have a combined key count of 721 rooms with average size of approximately 500 square feet with a 75% suite mix. They have seven separate food-and-beverage outlets, including Harriet's Rooftop that offers views of Nashville's skyline. There's also a Bamford Wellness spa with six treatment rooms, two fitness centers and a yoga studio. There is 33,000 square feet of shared meeting space, including a 9,400-square-foot ballroom and 9,300 square feet of pre-function space.
The two hotels are located blocks away from several live music and entertainment venues in the Lower Broadway entertainment district. The properties are across the street from the Music City Convention Center and adjacent to the Bridgestone Arena, home of the NHL's Nashville Predators. The hotels are minutes away from several other attractions, including Nissan Stadium, the Country Music Hall of Fame Museum, Vanderbilt University, Tennessee State University and Centennial Park.