Hersha Hospitality Trust, Philadelphia, has signed a definitive purchase agreement for the 122-room Hotel Oceana in Santa Barbara, California, for US$42 million.
The Hotel Oceana has an average daily rate of US$208.51 and occupancy of 93%, and it does not require any immediate capital expenditures, Hersha said in a news release.
The property will be independently operated and managed by HHM.
Hersha said the acquisition’s purchase price reflects a 7.6% capitalization rate on the trailing 12-month net operating income and an 8.5% to 9.5% capitalization rate on stabilized earnings. The purchase will be funded with cash on hand, and its price includes the assumption of US$25.3 million of mortgage debt, incurring interest at a fixed rate of 4.4% per year and maturing in 2023.
Located between Santa Barbara Harbor and Stearns Wharf, Hotel Oceana is directly across from the beach on Cabrillo Boulevard and within walking distance to downtown Santa Barbara.