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Boykin Lodging Acquires Hotel Lease Interests

CLEVELAND-The hotel REIT is able to handle the interests for 28 hotels from operating firms as a result of the new Modernization Act. The company will take a $15-million charge relating to the acquisition and termination of leases.

By Robert Carr | Updated on January 14, 2002

CLEVELAND-Boykin Lodging Co. has acquired leasehold interests for 28 of its hotels from two of its operators, Boykin Management Co. and Meristar Hotels & Resorts. The change was made under the new REIT Modernization Act, which allows leasing hotels to a subsidiary that qualifies as a taxable REIT subsidiary.

The company acquired leasehold interests in 25 of the hotels by issuing BMC 1.4 million limited partnership units of Boykin’s operating partnership and assuming from BMC $1.6 million of liabilities in excess of assets related to one of the lessee entities. The company entered into management agreements for BMC to operate 15 of the 25 hotels and took over BMC’s contract with Hilton Hotels Corp. for Hilton’s operation of the remaining 10 Doubletree branded hotels.

The company also restructured its relationship with Meristar by acquiring or canceling Meristar’s leasehold interests for three hotels and signing management agreements with Meristar to operate those hotels.

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