The Buccini/Pollin Group is planning to renovate and rebrand Sheraton Philadelphia Society Hill Hotel, the 364-key property it acquired from RLJ Lodging Trust for $95.5 million, or about $262,000 a key. The property will be managed by PM Hotel Group, a Washington, D.C.-based management company.
Located in the Old City district of Philadelphia at 1 Dock St., the property has 20,000 square feet of meeting and event space along with an indoor pool, fitness center, business center and restaurant.
“The Sheraton Society Hill is a remarkable asset in an unmatched location surrounded by numerous business and leisure demand generators, from the Liberty Bell and Independence Hall to Fortune 500 companies like Comcast and Aramark,” Dave Pollin, BPG co-founder, said in a prepared statement. “We are in the advanced planning stages of a complete makeover of the hotel to upgrade the guest experience. In addition to improving both guest rooms and public spaces, we intend to change brand affiliations to better match and serve the surrounding community.”
BGP is a privately held company with over $4 billion of real estate assets, including over 40 hotels, six million square feet of office and retail space, 10 major residential communities and multiple entertainment venues. The real estate acquisition, development and management company has offices in Philadelphia, Washington, D.C., Baltimore and Wilmington, Del., where it owns Hotel DuPont. The 217-room luxury hotel is in the midst of a $130 million renovation, according to Philadelphia Business Journal.
The company is also planning renovations at the 238-key Hilton Melbourne Rialto Place, a Melbourne, Fla., property it bought in January. Earlier this month, NKF Capital Markets said it arranged a $26.6 million loan for BPG from Ladder Capital Corp. to be used for acquisition and renovation costs.
RLJ’s moves after FelCor merger
For Bethesda, Md.-based RLJ Lodging Trust, the sale of Sheraton Philadelphia Society Hill Hotel was part of an ongoing disposition process resulting from its $1.2 billion merger last year with FelCor Lodging Trust Inc. In December, RLJ sold the historic 383-key Fairmont Copley Plaza hotel in Boston for about $170 million, or about $444,000 per key. In February, the company announced it had sold Embassy Suites Marlborough, a 229-key all suites hotel in Marlborough, Mass., for 23.7 million.
“The sale of another non-core asset at a highly accretive valuation highlights the meaningful progress we have achieved in realizing the embedded value from the FelCor merger. Not only is this disposition highly accretive on a valuation basis, but it is also accretive to our portfolio RevPAR and EBITDA margin,” Ross Bierkan, RLJ president & CEO, said in a separate statement. “With this transaction, we have accomplished our initial goal of generating approximately $300 million from asset sales at an attractive aggregate multiple. We continue to expect to execute on a second round of asset sales that will generate an additional $200 million to $400 million in proceeds this year.”
The company intends to apply the net proceeds of the sale to pay down its credit facility and for general corporate purposes. The REIT’s portfolio consist of 155 hotels with approximately 30,200 rooms across 26 states and the District of Columbia and an ownership interest in one unconsolidated hotel with 171 rooms.
Images courtesy of The Buccini/Pollin Group