FelCor Announces Agreement to Acquire Historic Hotel
02 Agosto 2010 - 9:00AM
Business Wire
FelCor Lodging Trust Incorporated (NYSE: FCH) today announced it
has entered into a purchase and sale agreement to acquire the
fee-simple interest in The Fairmont Copley Plaza hotel in Boston
for $98.5 million from an affiliate of Fairmont Hotels &
Resorts (“Fairmont”). Fairmont will continue to manage the property
under a long-term management agreement. The purchase is expected to
be completed in the third quarter and will be funded with cash on
hand.
The Fairmont Copley Plaza is a 383-room world-class, historic
hotel located in the heart of Boston’s Back Bay on Copley Square.
The property boasts 23,000 square feet of meeting space featuring
the 5,720 square-foot Grand Ballroom.
The hotel features two of the most prominent dining and
entertainment establishments in the city: The Oak Room and The Oak
Bar. The Oak Room is one of the leading steakhouses in Boston, and
The Oak Bar features an award-winning menu and has been recognized
as the Best Hotel Bar by Boston Magazine. The property last
underwent a major renovation in 2004, totaling $25 million, which
included all guestrooms and upgrading the fourth floor to the
premium Fairmont Gold.
“This irreplaceable asset is a significant acquisition for
FelCor. It fits all of our value and strategic investment criteria.
This hotel will improve the overall quality of our portfolio,
increase future RevPAR and EBITDA growth rates and further
diversify our portfolio by location, customer mix and product mix.
The Boston hotel market, particularly the Back Bay area, has
extremely high barriers to entry and diverse demand generators and
is one of our three stated targeted acquisition markets. This
transaction represents a rare opportunity to gain entry into this
submarket at an attractive price per room,” said Richard A. Smith,
FelCor’s President and Chief Executive Officer.
Transaction Highlights:
Attractive Pricing
The $98.5 million purchase price represents approximately
$257,000 per key, which is a significant discount to replacement
cost. The hotel is being purchased for less than nine times 2007
Hotel EBITDA (stabilized cash flow). The projected IRR is above our
weighted average cost of capital, creating incremental long-term
shareholder value.
Increases Portfolio Quality
The 2009 RevPAR of $162 is 98 percent higher than the 2009
portfolio average of $82.
Further Diversifies Portfolio
This hotel will be our first flagged and managed Fairmont
property. The 23,000 square feet of meeting space is nearly double
our current portfolio average of 12,000 square feet per hotel.
Increases barrier to entry protection
Boston’s Back Bay submarket has extremely high barriers to entry
and is in a prime CBD location that benefits from diverse demand
generators and low supply growth. Since 2004, only two hotels have
been added to the submarket and currently no new projects are in
the construction pipeline.
Additional Opportunities
We will implement a capital plan in excess of $20 million, which
includes an overall refreshing of the property and various
value-enhancement initiatives to augment future EBITDA growth. The
improvements, encompassing the public areas, guestrooms and the
addition of a new fitness center, will meet the needs of today’s
corporate guest. In addition, our aggressive and unique asset
management approach will enhance market share and Hotel EBITDA
margins.
CBRE Hotels acted as advisor to Fairmont in this
transaction.
With the exception of historical information, the matters
discussed in this news release include “forward-looking statements”
within the meaning of the federal securities laws. These
forward-looking statements are identified by their use of terms and
phrases such as “anticipate,” “believe,” “could,” “estimate,”
“expect,” “intend,” “may,” “plan,” “predict,” “project,” “should,”
“will,” “continue” and other similar terms and phrases, including
references to assumptions and forecasts of future results.
Forward-looking statements are not guarantees of future
performance. Numerous risks and uncertainties, and the occurrence
of future events, may cause actual results to differ materially
from those anticipated at the time the forward-looking statements
are made. Current economic circumstances or a further economic
slowdown and the impact on the lodging industry, operating risks
associated with the hotel business, relationships with our property
managers, risks associated with our level of indebtedness and our
ability to meet debt covenants in our debt agreements, our ability
to complete acquisitions, dispositions and debt refinancing, the
availability of capital, the impact on the travel industry from
increased fuel prices and security precautions, our ability to
continue to qualify as a Real Estate Investment Trust for federal
income tax purposes and numerous other factors may affect future
results, performance and achievements. Certain of these risks and
uncertainties are described in greater detail in our filings with
the Securities and Exchange Commission. Although we believe our
current expectations to be based upon reasonable assumptions, we
can give no assurance that our expectations will be attained or
that actual results will not differ materially. We undertake no
obligation to update any forward-looking statement to conform the
statement to actual results or changes in our expectations.
FelCor, a real estate investment trust, is the nation’s largest
owner of upper-upscale, all-suite hotels. FelCor owns interests in
84 hotels and resorts, located in 23 states and Canada. FelCor’s
portfolio consists primarily of upper-upscale hotels, which are
flagged under global brands - Embassy Suites Hotels®, Doubletree ®,
Hilton®, Marriott®, Renaissance®, Sheraton®, Westin® and Holiday
Inn®. Additional information can be found on the Company’s Web site
at www.felcor.com.
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