The purchase price reflects an approximate 11% capitalization rate, after capital reserves and management fees, of the 2000 estimated cash flow of the hotels to be sold or a multiple of 8x earnings before interest, taxes, depreciation and amortization (Ebitda). Upon closing, Lodgian will reduce its annual interest expense by more than $11 million, based on current interest rates.

Proceeds of the sale will be used substantially to pay down debt. The closing of the deal, which is subject to customary closing conditions, is expected to occur no later than September 30. The Portland-area hotels include the Marriott City Center, the Hilton Garden Inn in Lake Oswego and the Holiday Inn Select south of Wilsonville.

The company expects to record a pre-tax loss associated with the sale of approximately $50 million. There are other potential transactions in various stages disposition pipeline that could result in gains that would somewhat offset this loss, the company said.