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Recently, Chesapeake Lodging Trust (CHSP - Snapshot Report) completed the acquisition of Hyatt Place New York Midtown South for $76.2 million. This real estate investment trust (REIT) bought the property through a definitive agreement with Hyatt Hotels Corp. (H - Snapshot Report) in late January this year.

Chesapeake Lodging funded the transaction with available cash resources, a credit at closing equal to the outstanding balance of a construction loan provided to the seller and a $35.0 million advance under the company’s term loan worth $60 million, which it took in Jul 2012. Notably, Chesapeake Lodging also penned a deal with its N.Y.-based property’s operator – Real Hospitality Group – for management of Hyatt Place New York Midtown South hotel.

Strategically positioned at W 36th Street in the central Manhattan, Hyatt Place Midtown South is a newly developed hotel having 185 rooms. The property is located in proximity to many renowned sights and attractions of the city, such as Times Square, the Empire State Building, Madison Square Garden, the theaters of Broadway and Radio City Music Hall. The ideal position of the property makes it conveniently accessible through major modes of transport.

Hyatt Place Midtown-South is Chesapeake Lodging’s first Hyatt Place-branded property owned in Manhattan. Also, it is Hyatt Hotels’ first Hyatt Place-branded property in N.Y. The abovementioned hotel acquisition will further strengthen Chesapeake Lodging’s relationship with Hyatt Hotels. Chesapeake Lodging owns 2 Hyatt-branded hotels – Hyatt Regency Boston and Hyatt Regency Mission Bay Spa & Marina – in the U.S.

This is an important acquisition for Chesapeake Lodging, given the strength of the Hyatt Hotels brand and the compelling growth opportunity of the Manhattan market. The strategic move is expected to be accretive to the company’s long-term earnings and supplement its portfolio of premium properties.

Chesapeake Lodging owns luxury and upscale hotels in some of the most desirable locations in the United States. The company specifically focuses on owning and acquiring hotels at prices below the replacement cost, with attractive return on investments and significant upside potential. Currently, the company owns 16 hotels with an aggregate of 4,907 rooms in 7 states and the District of Columbia.

Chesapeake Lodging currently retains a Zacks Rank #5 (Strong Sell). REIT’s that are performing much better than Chesapeake Lodging include Chatham Lodging Trust (CLDT - Snapshot Report) and Cousins Properties Inc. (CUZ - Analyst Report). Both stocks carry a Zacks Rank #2 (Buy).

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