The Germantown, TN-based REIT paid locally based McKibbon Hotel Group Inc. $34.2 million, or an average $96,610 per unit, for a total 354 suites in Gainesville, Tallahassee and Tampa. The deal is expected to close during first quarter 2004.
That transaction includes a 93-suite Marriott Courtyards in Tallahassee and an 81-suite hotel in Gainesville; a 102-suite Residence Inns by Marriott in Tampa; and a 78-suite Residence Inns in Tallahassee.
McKibbon Hotel Management Inc. will continue to manage the properties with incentive-based management contracts. McKibbon manages 37 hotels in seven states. The properties are primarily Marriott Courtyards and Residence Inns.
The properties are less than five years old and mark Equity Inns' entry into three "new and growing markets," says Phillip H. McNeill Sr., Equity Inns' CEO and chairman. "As the cycle seems to be turning, we believe that this is a timely acquisition that dovetails nicely with our long-term investment philosophy of buying strategic assets in the upscale segment with locations that provide us the opportunity to generate additional growth from the asset," he says.
Additionally, "by awarding the contract to McKibbon Hotel Management, we are complying with our corporate strategy of having a select group of proven operators manage our properties," he says. "It also provides us access to another large pipeline of properties."
McKibbon estimates the impact of the acquisitions "will be positive" to the company's 2004 funds from operations. "We are committed to capturing value as opportunities arise," he says. "Our strong balance sheet enabled us to quickly capitalize on this type of opportunity, which upgrades our portfolio while expanding our presence into three new and growing markets.
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