Hotel REIT Pockets $73M from Stock Sale

ARLINGTON, VA-Hotel REIT MeriStar Hospitality Corp. has just closed on the sale of 12 million shares of common stock. The transaction, underwritten by Lehman Brothers, has left the REIT in possession of nearly $73 million in cash. And there could be more funds to come, as Lehman Brothers has until May 23 to take advantage of an over-allotment option allowing it to acquire an additional 1.8 million shares. MeriStar said it plans to funnel the funds toward the acquisition of more hotel properties. To date, the company owns 81 properties across 23 states, Washington, DC and Canada. “The types of hotels we’re looking at are largely major hotels in urban areas, or resort hotels, with significant meeting space, all upper scale properties,” Bruce Riggins, MeriStar vice president for strategic planning and analysis, tells GlobeSt.com. Riggins did not give specifics, but he did say there are properties the company has its eyes on. “We have a pretty active pipeline of deals we’re working on, and we think we’ll be able to redeploy the funds fairly quickly.” MeriStar is looking strictly within the US, but it is not isolating any one part of the country. There are no plans at the moment to direct the funds toward the acquisition of international properties.In addition to beefing up its ownership of large luxury hotels and resorts in the right locations, MeriStar has also been ridding its portfolio of non-core assets. In a $29.5-million transaction just last month, the company sold off five hotels in Phoenix, Shelton, CT, and Bedford, Dallas and Midland, TX.