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Non-Traded REIT Sells Hotel Portfolio to NorthStar for $1.1 Billion

NorthStar Realty Finance Corp. (“NorthStar Realty”) recently announced its acquisition of a $1.1 billion hotel portfolio from Inland American Real Estate Trust, a non-traded REIT.

The hotel portfolio includes 52 upscale extended stay and select service hotels with approximately 7,000 rooms.

NorthStar Realty is also expecting the closing of another $700 million hotel portfolio later in the month. With both acquisitions, NorthStar Realty’s hotel portfolio will be valued at approximately $3.2 billion including 159 hotels and over 20,000 rooms.

The acquisition includes a joint venture with Chatham Lodging Trust (Chatham).

NorthStar will have an approximate 90% ownership interest in the portfolio while Chatham will hold the remaining 10% minority interest.

National hotel management company, Island Hospitality is expected to manage a significant majority of the hotels in the portfolio.

“We are excited about the continued expansion of our portfolio of extended stay and limited service hotels and the deepening of our relationship with Chatham and Island Hospitality. This portfolio is expected to generate strong risk-adjusted returns for our shareholders and provides NorthStar Realty with substantial optionality, scale and diversification in a sector that we strongly believe will continue to benefit meaningfully from a growing economy,” commented David Hamamoto, NorthStar Realty’s Chairman and chief executive officer.

Inland American, through the end of June 30, 2014, owned 268 properties, which includes about 24 million square feet of retail, industrial and office properties, 8,313 student housing beds and 19,927 hotel rooms. According to data from MTS Research Advisors, Inland American’s properties are 92% leased and carry an asset value of over $10.1 billion.

In early August, the non-traded REIT announced plans to spin off its lodging portfolio into a separate company and list on the New York Stock Exchange under the name Xenia Hotels & Resorts, Inc.