"We believe the size and type of hotels we are selling typically are more effectively operated by individuals or small investor groups tied into the community than by a large corporation," Parrington says in a prepared statement. "We are better structured to own and operate larger, mid-market properties in primary and selected secondary markets and will focus our attention there."
The hotels being sold are primarily full-service properties in secondary and tertiary markets. Parrington, a former executive at Marriott, Interstate and Ramada, says several hotels are already under contract. "We expect to close several sales by year end," he says. The company has invested $30 million to date in upgrading its portfolio.
"We are timing these sales to take advantage of an increasingly attractive hotel real estate market," Parrington says. "With the sale of these non-core hotels, we expect to be able to significantly reduce our debt and further strengthen our balance sheet."
Lodgian emerged from Chapter 11 with 78 hotels on Nov. 25, 2002, as GlobeSt.com previously reported. The 78 hotels were owned by Lodgian subsidiaries Impac Hotels II LLC and Impac Hotels III LLC. When the two subsidiaries filed for protection under the US Bankruptcy Code on Dec. 5, 2001, Lodgian listed assets of $1 million and debt of $968.7 million.
In January of this year, the company returned eight hotels to a lender to satisfy a debt. Another hotel was returned to the lessor of a capital lease. The remaining 18 hotels left bankruptcy protection on May 22, 2003. The company has a minority interest in another hotel which was not part of the bankruptcy proceedings.
Parrington believes "the hotel real estate (investment) market is becoming more attractive as evidence of an economic and hotel industry rebound continues to grow." Besides looking at new acquisitions, Lodgian also may consider developing properties from the ground up, the executive says.
Lodgian has contracted with CB Richard Ellis Hotels of Chicago and Hodges Ward Elliott of Atlanta to sell most of the 19 hotels. Lodgian's 97-hotel portfolio comprises 18,265 rooms located in 30 states and Canada. Eighty-two hotels are franchised under the InterContinental Hotels Group (Crowne Plaza, Holiday Inn, Holiday Inn Select and Holiday Inn Express) and Marriott brands (Courtyard by Marriott, Fairfield Inns and Residence Inns). Ten hotels are affiliated with other nationally recognized hospitality franchises. Five hotels are independent, unbranded properties.
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