Fairmont Hotels Selling Island Resort for $355M

MAUI-Host Marriott Corp. of Bethesda, MD, is acquiring the 450-room Fairmont Kea Lani Maui from Toronto-based Fairmont Hotels & Resorts for $355 million, or $789,000 per room. Fairmont will retain a long-term management contract for the property. The transaction is scheduled to close in August.Fairmont purchased The Fairmont Kea Lani Maui and its management contract in February 2001 for $250 million. Fairmont says its pre-tax gain on the sale will be approximately $110 million and its after-tax gain about $69 million. Fairmont says it expects to reinvest a portion of the proceeds in additional hotels over the course of the next 12 months. Another chunk of the proceeds will be used to acquire the remaining interest in the Fairmont management company, to increase its share purchases under its existing share repurchase program and, in the interim, to reduce existing indebtedness. Maritz, Wolff & Co., a significant owner of hotel real estate managed by Fairmont, recently advised Fairmont that it intends to exercise its put option on the remaining 16.5% interest in the Fairmont management company. That transaction also is expected to be completed in the third quarter, at which time FHR will own 100% of the Fairmont brand and management company.