Silver Spring, MD � June 1, 2004 � Sunburst Hospitality announced today
that the company has completed its long-term strategic disposition plan
with sale this month of the beach-front Comfort Inn, Miami Beach, Florida,
to a regional condominium developer. As a result, Sunburst has reduced
debt to $76 million, down from $301 million which financed management�s
leveraged buy-out of the public company in January 2001.
�This
is an exciting time for us as a private company and for the hospitality
industry as a whole,� said CEO James MacCutcheon in making the announcement.
�We have not only significantly reduced debt but improved profitability.
�Our remaining core portfolio of properties has experienced excellent
operating improvement,� said Mr. MacCutcheon. �RevPAR is up nearly 12%
and we anticipate a great summer season.�
As a result of the company�s strong position, Mr. MacCutcheon says the
firm�s senior management team is exploring development and acquisition
opportunities and investments in related businesses.
Over the past three years, Sunburst�s debt to EBITDA has been reduced
from over 6:1 to about 3.5:1, in spite of declining same store revenues
from mid 2001 through mid 2003, according to Mr. MacCutcheon.
�Rapid debt reduction subsequent to the leveraged buy-out was the principal
strategic and tactical objective of our management team. We are pleased
to achieve this goal ahead of schedule as well as weathering the challenging
operating environments of 2001 and 2002.�
Sunburst�s total debt in January 2001, following management�s $370 million
leveraged buy-out of the company, was $301 million. When the company recapitalized
and bought out public shareholders in January 2001, the future sale of
assets not deemed to be long-term strategic fit was critical to management�s
plan, according to Mr. MacCutcheon, as was the company�s reduction of corporate
overhead and operational efficiencies. The company has succeeded on all
fronts.
Currently Sunburst�s portfolio is trimmed to 30 core hotels.
�Our remaining portfolio is geographically focused, with hotels on excellent
sites located in strong markets,� said Mr. MacCutcheon.
Sunburst�s properties are concentrated in the Baltimore/Washington corridor
and urban and resort markets in Florida, the Northeast and West Coast.
"By every measurement, we have significantly reduced our debt leverage,
strengthening our balance sheet to facilitate the pursuit of opportunities
as they arise,� said Mr. MacCutcheon. "As a private company, we optimize
our flexibility in pursuing attractive opportunities, with little need
to focus on growth for growth's sake or the next quarter's earnings per
share."
About Sunburst Hospitality
Sunburst Hospitality Corporation is a leading hotel owner and manager
of nationally recognized hotels and operates in 24 states. Sunburst's hotels
are branded as Best Western, Clarion Hotels, Comfort Inns and Suites, Holiday
Inn Express, Quality Inn, and Sleep Inn.
James A. MacCutcheon, the company's president and CEO, has been with
the company and its predecessor organizations since 1987. Sunburst grew
from a portfolio of 11 hotels to 89 hotels, and achieved $210 million annual
revenue at its peak.
Sunburst is committed to developing and successfully implementing strategies
to maximize the value of its operating hotels. Mr. MacCutcheon and the
executive management team have a successful record of managing ahead of
industry cycles.
Prior to the most recent hospitality industry downturn, the Company
was able to liquidate a substantial portion of its existing hotel portfolio.
The Company capitalized on the distressed real estate and capital markets
in the early 1990s by opportunistically acquiring hotels at significant
discounts to replacement cost. In 1995, the Company responded to changing
industry cycles by shifting its growth strategy to construction of mid-market,
all-suite extended-stay MainStay Suites hotels. In January 2001, management
completed a leveraged buy-out of the Company, which formerly traded on
the New York Stock Exchange. Sunburst Hospitality remains one of the largest
private owners and operators of hotel properties in the U.S.
Sunburst recognizes that its best investments are those that it makes
in its people. The Company is a recognized industry leader in developing
and implementing best practices in the human resources area. Innovative
compensation and benefit programs are in place at all levels of the company.
Sunburst remains committed to developing opportunities for the career advancement
of its associates while maximizing the value of assets in its portfolio.
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