Sunstone to Buy Hilton Garden Inn - Analyst Blog
20 Junho 2012 - 7:45AM
Zacks
Sunstone Hotel Investors,
Inc. (SHO), a lodging
real estate investment trust (REIT), recently announced that it has
entered into a purchase and sale agreement to acquire the Hilton
Garden Inn Chicago Downtown/Magnificent Mile for a gross purchase price of $91.75
million.
The purchase price signifies a forward
capitalization rate of around 7.7% on the company’s estimated net
operating income in 2012. The transaction is expected to close in
the third quarter of 2012.
Illinois, Chicago-based Hilton Garden
Inn is renowned for its modern and luxurious amenities. The
357-room, 23-story Hotel caters to the business and leisure
travelers as it is in close proximity to the most demanded
tourists’ locations like the Art Institute of Chicago,
‘Magnificent Mile’ along Michigan
Avenue, Michigan Avenue Shopping and River North
attractions.
Sunstone expects the acquisition to improve the
overall portfolio given the hotel’s superior RevPAR (Revenue per
Available Room) and EBITDA (Earnings Before Interest Expense,
Taxes, Depreciation and Amortization) per key, strong urban
location and close proximity to Sunstones’ other hotels in downtown
Chicago.
Management stated that Sunstone is experiencing
continuing growth within its existing portfolio. As of June 15,
2012, comparable hotel RevPAR experienced a quarter-to-date
increase of 7.5%.
Additionally, the balance sheet position of the
company is also expected to improve as the acquisition is totally
funded with cash, thus incurring no mortgage debt for the Hotel.
Subsequent to closing of the transaction, Sunstone will have 14
unencumbered hotels.
Recently, Sunstone announced the closing of the
previously announced acquisition of the 417-room Wyndham Chicago
and rebranding it to Hyatt Chicago Magnificent Mile. The company
now owns two hotels, Embassy Suites Chicago and Hyatt Chicago
Magnificent Mile in downtown Chicago area, along with the newly
acquired Hilton Garden Inn. Management aims to coordinate revenue
management of the three hotels to effectively manage the operations
of its portfolio in the downtown area.
Aliso Viejo, California-based Sunstone owns,
acquires, sells and renovates luxury, upper upscale and upscale
full-service hotels across the United States. The company operates
the hotels under world class brands like Marriott, Hilton, Hyatt,
Fairmont and Sheraton. With the completion of the acquisition, the
company will have 33 hotels, held for investment, comprising 13,
698 rooms.
Sunstone, which competes with the likes of Host Hotels & Resorts Inc. (HST) and
FelCor Lodging Trust Inc. (FCH) has a
long-term Neutral recommendation and holds a Zacks #2 Rank
signifying a short term ‘Buy’ rating.
FELCOR LODGING (FCH): Free Stock Analysis Report
HOST HOTEL&RSRT (HST): Free Stock Analysis Report
SUNSTONE HOTEL (SHO): Free Stock Analysis Report
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