News for the Hospitality Executive
Interstate Hotels & Resorts Forms Joint Venture with
Harte Holdings of Ireland,
Signs Agreement to Acquire Four-hotel Portfolio from
Blackstone for $208 Million
|ARLINGTON, Va., December 4, 2007—Interstate Hotels &
Resorts (NYSE: IHR), a leading hotel real estate investor and one of the
nation’s largest independent operators of full and select-service hotels,
today announced that it had formed a joint venture with Harte Holdings
of Cork, Ireland. The joint venture signed a definitive agreement
to acquire four hotels from affiliates of The Blackstone Group for an aggregate
price of $207.8 million. Interstate will invest approximately $11
million for a 20 percent equity interest in the four hotels. Interstate
will fund the acquisition with available cash and capacity under its senior
revolving credit facility. The transaction is expected to close in
the first quarter of 2008.
The four properties included in the joint venture acquisition are:
Interstate currently manages three of the properties and previously managed the Latham hotel for the Blackstone Group and MeriStar Hospitality. Upon closing, Interstate will manage all four hotels under new management agreements.
The partnership plans to invest more than $30 million of additional funds for renovations on the hotels over the 24 months following the acquisition, with Interstate’s contribution expected to be approximately $2 million.
“This joint venture represents a continuation of our hotel real estate ownership strategy and expands our JV partner universe,” said Thomas F. Hewitt, Interstate’s chief executive officer. “The four-hotel portfolio was attractively priced, at or below replacement costs, and aligns well with our portfolio of wholly owned and JV real estate holdings.
“The hotel package includes two key upscale, full-service brands, Hilton
and Sheraton, and a well-recognized independent boutique hotel in Georgetown
that offers significant repositioning opportunity,” Hewitt added.
“Three of the properties are located in key urban and major suburban markets
with strong barriers to entry — Washington, D.C., northern New Jersey,
and the Philadelphia area. The fourth property, the Hilton in Lafayette,
La., is having an exceptional year with RevPAR growth in excess of 20 percent,
and we expect the hotel to provide strong, stable cash flow going forward.
With the anticipated capital investment, this entire portfolio has considerable
upside operating potential.”
“As one of the few management/ownership companies with a strong and growing international presence, we will continue to seek global opportunities and relationships,” said Leslie Ng, Interstate’s chief investment officer. “Harte Holdings is a highly regarded Irish investment and development company which owns a wide variety of real estate projects in the United Kingdom, Ireland and mainland Europe, and we look forward to exploring other opportunities together, both domestically and abroad.”
“This is our first hotel joint venture in the U.S., and Interstate, with its successful track record, its management expertise, and the advantages afforded by its size, represents a very strong partner,” said Donal Kelleher, investment director of Harte Holdings. “We look forward to expanding our relationship with other similar opportunities.”
About Harte Holdings
This press release contains “forward-looking statements,” within the meaning of the Private Securities Litigation Reform Act of 1995, about Interstate Hotels & Resorts, including those statements regarding future operating results and the timing and composition of revenues, among others, and statements containing words such as “expects,” “believes” or “will,” which indicate that those statements are forward-looking. Except for historical information, the matters discussed in this press release are forward-looking statements that are subject to certain risks and uncertainties that could cause the actual results to differ materially, including the volatility of the national economy, economic conditions generally and the hotel and real estate markets specifically, the war in Iraq, international and geopolitical difficulties or health concerns, governmental actions, legislative and regulatory changes, availability of debt and equity capital, interest rates, competition, weather conditions or natural disasters, supply and demand for lodging facilities in our current and proposed market areas, and the company’s ability to manage integration and growth. Additional risks are discussed in Interstate Hotels & Resorts’ filings with the Securities and Exchange Commission, including Interstate Hotels & Resorts’ annual report on Form 10-K for the year ended December 31, 2006.
|Also See:||Interstate Hotels Completes $9 Million Renovation of the Hilton Lafayette / October 2006|
|Redquartz Boundary Ltd. (RQB), an Irish-based Investment Company Acquires the Sawgrass Marriott Resort & Spa; Interstate Retains Minority Ownership and Management Contract / July 2006|