These leases are part of 60 the company said it would acquire from Innkeepers Hospitality in a move allowed by the REIT Modernization Act. Innkeepers USA Trust has agreed to pay a nearly $5.3 million cash consideration for all 60 leases. The company has formed wholly owned taxable REIT subsidiaries to acquire the leases.
At the time of the closing of the 23 leases, company taxable REIT subsidiaries entered into management agreements with an affiliate of Innkeepers Hospitality to manage the 23 hotels.
Under the acquisition agreement, Innkeepers Hospitality is paying off its liabilities, including its outstanding line of credit, and will sell all the Innkeepers USA Trust shares it owns. That figure, as of Nov. 1, was about 247,000 common shares and 20,500 Series A preferred shares. All of them were acquired in the open market.
Innkeepers USA Trust says it expects to complete the acquisition of the 37 Innkeepers Hospitality leases remaining in the first quarter of next year. The affiliate of Innkeepers Hospitality that will manage the hotels must get more management contracts with owners not affiliated with the company so it can qualify as an "eligible independent contractor," defined by the RMA, for the hotels covered by the 37 remaining leases.
Innkeepers Hospitality is controlled by Jeffrey H. Fisher, president, CEO and chairman of the board of trustees of Innkeepers USA Trust. Innkeepers USA Trust owns upscale, extended-stay hotel properties throughout the country. The REIT owns 67 hotels with 8,311 suites or rooms combined in 22 states. The REIT focuses on acquiring and/or developing Residence Inns by Marriott and other hotels, as well as rebranding and repositioning other hotels.
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