Hotel Online  Special Report



advertisement

-
Charlesbank and Winston Hotels Form Venture, Seeks
to Acquire Over $100 Million of Hotel Assets
RALEIGH, N.C. Dec. 30, 2002 -- Winston Hotels, Inc. (NYSE: WXH), a real estate investment trust (REIT) and owner of limited-service, upscale extended-stay and full-service hotels, today announced that it has formed an investment entity with Boston-based Charlesbank Capital Partners, LLC to acquire more than $100 million of hotel assets.

Charlesbank is a private investment firm managing capital on behalf of a range of institutional investors. Johnson Capital, a boutique investment banking firm based in Los Angeles, and Cohen & Steers Capital Advisors, LLC, a New York City-based investment banking firm, facilitated the transaction.

Winston serves as managing member of the investment entity, which targets limited-service, upscale extended stay, and small, full-service branded hotels in secondary and primary markets. The investment entity focuses on acquisitions that have turnaround or upside potential and can benefit from additional capital and aggressive asset management, which often includes renovating, repositioning, rebranding or a change in management.

The investment entity has invested in two projects with an expected all-in cost of approximately $14.3 million, about $9.4 million of which is financed through debt. The first project is a vacant building located in the Beachwood suburb of Cleveland, Ohio that is being converted into a 113-room Courtyard by Marriott and is expected to open during the second quarter of 2003. The second hotel is a 102-room Fairfield Inn & Suites by Marriott located in Des Moines, Iowa, which was converted from a Wingate Inn this past summer. Both of the projects had been held by Winston in a 50/50 joint venture with Concord Hospitality Enterprises Company.  Concord will retain a 13% interest in the projects while the investment entity will own the remaining 87%.

"The formation of the venture with Charlesbank is an integral part of our three-pronged strategy to grow in all phases of the hotel real estate cycle," said Bob Winston, Winston Hotels' chief executive officer. "During the downward portion of the cycle, the venture will allow us to acquire and add value to attractively priced hotels. Our mezzanine financing program allows us to participate as the cycle improves. And, we can grow in all but the most difficult economic times through upgrading and improving operations at our existing portfolio. Charlesbank, with a real estate investment portfolio in excess of $1 billion, is a strong partner with an impressive track record, and we look forward to expanding our relationship with them."

Under the terms of the investment entity agreement, Charlesbank will provide 85 percent, while Winston will provide the remaining 15 percent of the total equity committed to each acquisition the investment entity approves. Charlesbank will have the option to expand the venture by committing additional equity to future acquisitions after the initial equity is committed. The investment entity anticipates that it will be able to secure debt financing for 65 percent of the all-in cost of hotel assets that the entity purchases.

"We are looking to further diversify our real estate holdings and think now is an excellent time to begin buying hotel real estate, particularly in this segment where there are more opportunities," said Andy DiMatteo, Charlesbank senior vice president, real estate.  "We chose to partner with Winston Hotels because of their experience and first-hand knowledge in this segment and their strong track record of success."

Joe Green, Winston's chief financial officer, noted that the new investment entity is looking at major brands in strong locations, not necessarily in major markets. "We like secondary markets where we think there is a lot of potential, such as suburban office parks, university areas, and small suburbs of larger markets. Our goal is to reinvigorate an underperforming hotel in a good location through capital infusion, rebranding, renovating, repositioning and often a management change.

The limited-service, upscale extended-stay and certain mid-market brands have performed well for the past few years, and we believe they will continue to do so for the next several years. Also, these segments tend to weather economic downturns better than larger urban properties and generate superior returns in a good economy."

Hotel brokers will receive full commissions, and the venture will give preference to management companies presenting transactions that subsequently are acquired by the venture. Winston Hotels will provide asset management services and manage the redevelopment and renovation process.

Charlesbank Capital Partners, LLC, is a private investment firm managing capital on behalf of a range of institutional investors, with more than $1 billion of capital committed to acquisition and expansion financing for developing real estate assets and growing companies. The real estate team generally invests in equity or mezzanine debt structures, sometimes with a strategic operator or developer who brings complementary expertise or market knowledge. The firm has offices in Boston and New York.

Raleigh, North Carolina-based Winston Hotels, Inc., is a real estate investment trust specializing in the development, acquisition, repositioning and active asset management of premium limited-service, upscale extended-stay and full-service hotels, with a portfolio increasingly weighted toward the leading brands in the lodging industry's upscale segment. The Company currently owns or is invested in 53 hotels with 7,266 rooms in 17 states, which includes: 45 wholly-owned properties with 6,207 rooms; a 49 percent ownership interest in three joint venture hotels with 453 rooms; a 13.05 percent ownership interest in two joint venture hotels with 215 rooms; and a mezzanine financing interest in three hotels with 391 rooms. 

In addition to historical information, this press release contains forward-looking statements. 

###

Contact:
Winston Hotels, Inc.
Patti L. Bell, 919/510-8003
[email protected]


 
Also See Winston Hotels Announces Proposed Acquisitions and Developments of $109 Million / April 1998
Winston Hotels Fine Tunes Portfolio; Sells Comfort Inn Executive Center in Clearwater, Fla., for $3.4 million / May 2002


To search Hotel Online data base of News and Trends Go to Hotel.Online Search

Home | Welcome! | Hospitality News | Classifieds | Catalogs & Pricing | Viewpoint Forum | Ideas/Trends
Please contact Hotel.Online with your comments and suggestions.