Bethesda, Maryland-based real estate investment trust RLJ Lodging Trust announced Monday it has purchased the fee-simple interest in the 21c Museum Hotel Nashville for $59 million, according to a news release.
Comprised of 124 rooms, the sale price amounts to $476,000 per key. RLJ funded the purchase with cash on its balance sheet.
The historic Gray & Dudley Building was built in 1910 and was converted into the 21c hotel in 2017. The REIT plans for 21c to continue to operate the hotel in affiliation with Accor.
RLJ expects the hotel to generate roughly 8%-8.5% stabilized net operating income yield as well as an accretive stabilized revenue per available room double that of RLJ's portfolio.
Leslie Hale, president and chief executive officer of RLJ, said in the news release that 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."
Along with this transaction, Hale said RLJ repurchased company shares at a "meaningful discount to our [net asset value] with proceeds from asset sales, accretively."
In total, RLJ repurchased about $4.2 million shares of common stock at an average price of $11.93 per share.
RLJ's portfolio largely consists of premium-branded, high-margin, focused-service and compact full-service hotels. The portfolio, following the 21c acquisition, now totals 96 owned hotels across 23 states.