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DALLAS, Nov. 24 - American General Hospitality Corporation (NYSE: AGT),
a hotel real estate
investment trust, today announced that it has entered into agreements
to acquire five hotels. The acquisitions
include a four-hotel portfolio as well as one other hotel in a separate
transaction. The hotels are being acquired
for $119 million.
The five hotels contain an aggregate of 1,302 rooms. The portfolio acquisition includes:
"This is a significant investment opportunity for American General Hospitality,"
said Steve Jorns, president and
chief executive officer. "These hotels fit our strategy of continuous
geographic diversification and are
appropriate candidates to benefit from our proven product, operational
and brand repositioning strategies. For
example, in Alexandria, Va., we plan to implement broad product renovations
to upgrade the Ramada Plaza Hotel,
and expect to reposition it to a premium brand in 1999, which should
generate increased room rates commensurate
with the improved quality. And, at the O'Hare Holiday Inn, we are planning
to expand, renovate and convert the
hotel to a more upscale Holiday Inn Select, or Crowne Plaza Hotel.
All five of the hotels meet our criteria for their
ability to enhance the performance of our portfolio, creating added
value for our shareholders."
Holiday Inn O'Hare International Hotel - Rosemont
Established in one of the country's top metropolitan markets, this Holiday
Inn Hotel is a 507-room first-class hotel and convention facility in Rosemont
with a prime location adjacent to the world's busiest airport, O'Hare
International. Additionally, it is only 15 miles from downtown
Chicago, directly across the street from the currently expanding Rosemont
Convention Center and next to the heavily promoted Rosemont Theater.
The hotel offers several opportunities to increase operating performance
by implementing both product and
brand repositioning strategies as well as a major facility expansion.
In the past three years, more than $7 million
has been invested by the existing owners in upgrading and renovating
the hotel. American General Hospitality
plans to invest an additional $7 million to renovate the guest rooms
and public areas of the hotel. Following the
scheduled renovation, the company expects to upgrade the hotel to a
Holiday Inn Select, or Crowne Plaza Hotel.
Additionally, Rosemont city zoning and business officials granted preliminary
approval for the addition of 242
guest rooms at the Holiday Inn O'Hare. The expansion is expected to
be at an estimated cost of $19 million, and
will be completed in conjunction with the product repositioning.
The hotel's amenities include three restaurants, two lounges, one indoor
and one outdoor swimming pool, and
approximately 55,000 square feet of convention, meeting and pre-function
space.
The purchase of the Holiday Inn means expanding penetration for American
General Hospitality in Chicago. The
company entered this market in March of 1997, with the acquisition
of a 201-room Radisson in suburban
Arlington Heights. Recently, it announced its 1998 plan to add 100
additional guest rooms to the Radisson.
Ramada Plaza Hotel - Alexandria
The 258-room Ramada Plaza Hotel in Alexandria, Va., is a full-service hotel offering seven meeting rooms, a grand ballroom, restaurant, lounge, swimming pool and sundeck. The company will be implementing product renovations in 1999, and expects to reposition this hotel to a premium brand at that time.
This hotel is positioned favorably near Virginia's historic section
of "Old Town" Alexandria and, as such, benefits
from tourists visiting its many attractions: Mount Vernon, George Washington's
home and Arlington National
Cemetery, among others. Nearby office buildings drive strong corporate
demand, and the hotel's proximity to
National Airport generates additional occupancy.
Holiday Inn Hotel and Suites - Alexandria
The strong fundamentals, prime location -- only five miles from Washington,
D.C., and multiple attractions of Alexandria, Va., are highly attractive
to American General Hospitality's objective of building its hotel
portfolio in thriving geographic areas.
The 178-room Holiday Inn Hotel and Suites is an upscale, full-service
hotel that includes a spacious lobby,
restaurant, lounge, exercise facilities, an indoor/outdoor swimming
pool and approximately 12,000 square feet of
meeting space.
Holiday Inn - Annapolis
Annapolis, Maryland's capital city, generates well-balanced demand between group business and leisure travelers, making it an attractive market for American General Hospitality. The city's 220-room Holiday Inn benefits from limited lodging competition due to the compact size of the market and its historic nature, which prevents significant new development. The hotel is also capitalizing on recently completed renovations to its public areas and exterior structure. The company believes that the more appealing, competitive condition of the hotel should improve its operating performance substantially. In addition, management plans to implement guest room renovations once the acquisition is completed, and is reviewing its option to upgrade the brand to a Holiday Inn Select, in order to further improve the hotel's image and ability to achieve appropriately higher room rates.
The Holiday Inn has an excellent location with superior visibility from
a major highway, which accesses the
Eastern Shore and beach resorts. As such, this hotel benefits from
a high volume of traffic passing through the
area. Annapolis is also home to the U.S. Naval Academy, which provides
considerable group business to the
city's lodging facilities. Visitors to the State Capitol also contribute
to the flourishing demand in this market.
The Holiday Inn's amenities include the largest meeting and convention
space in Annapolis, an outdoor
swimming pool, restaurant and lounge. The acquisition of this full-service
hotel extends American General
Hospitality's presence in Maryland.
Holiday Inn Express BWI Airport West - Hanover
Well positioned in the Hanover, Md., market, only 2.5 miles from the
Baltimore/Washington International Airport, and as the closest hotel to
the headquarters of the National Security Agency (NSA) -- a significant
generator
of lodging demand in the area -- the 159-room Holiday Inn Express enjoys
strong occupancy levels and increasing room rates. The five-story
high rise offers an outdoor swimming pool, fitness center, small-meeting
space and a hospitality room providing complimentary breakfasts daily.
Connected to the facility is a Denny's restaurant chain that is leased
to an independent operator.
The hotel, which is being acquired as part of the portfolio package,
is in excellent condition, requiring no major
renovation in the near term. And, while no expansion is currently planned
for the hotel, its seven-acre site offers
the opportunity for an addition, if deemed appropriate in the future.
American General Hospitality Corporation is a publicly traded real estate
investment trust (REIT) with a current
portfolio, prior to the closing of these acquisitions, of 26 hotels
in 16 states containing 6,757 guest rooms.
Operating in major markets, the company is focused on creating shareholder
value through acquisitions, and
product, operational and brand repositioning.
Note: Statements in this press release which are not strictly historical
are "forward-looking" statements that are
made pursuant to the safe harbor provisions of the Private Securities
Litigation Reform Act of 1995.
Forward-looking statements involve known and unknown risks, which may
cause the company's actual results in
the future to differ materially from expected results. These risks
include, among others, competition within the
lodging and contract service industries; the relationship between supply
and demand for hotel rooms and
vacation ownership resorts; the effects of economic conditions; issues
associated with the acquisition and
renovation of existing hotels and the development of new hotels; operating
risks; the historical cyclicality of the
lodging industry; risks associated with the dependence on franchisors
of the company's lodging properties; and
the availability of capital to finance planned growth, as described
in the company's filings with the Securities and
Exchange Commission.