|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
Sunburst Hospitality Corporation
|Also See:||Sunburst Hospitality Completes $6.5 million Renovation on the Former Quality Hotel MainGate; Converts Property to Clarion Anaheim Resort / Mar 2003|
|Sunburst Hospitality Amends Bank Credit Facility, Pays Down Debt Early in Wake of Leveraged Buy-out / Sept 2002|