Kentucky REIT Pays $60M for Hotel-Casino

VERDE CAROLINA, PUERTO RICO-Eagle Hospitality Properties Trust Inc. has acquired the 299-room Embassy Suites San Juan Hotel here for $60 million. Ray Martz, CFO of the year-old Kentucky-based REIT, tells GlobeSt.com that the seller was a local developer and Hilton Hotels. Hilton, which owned a minority stake, will continue to manage the property on a long-term basis, he says.The all-suite, eight-story hotel opened in 1997 in the Isla Verde Beach area. It includes a 200-seat Outback Steakhouse Restaurant, two lounges, outdoor pool complex with thatched cabanas, 9,300 sf of meeting space, a fitness center and a business center. “The property generates healthy cash flows and has historically performed well in good and bad times,” Martz says.Eagle Hospitality funded the acquisition with $7 million of equity and a $53.1-million, 5% bridge loan from Key Bank Capital Markets that the company expects to refinance with a longer-term instrument. The equity included a portion of the net proceeds from the Company’s Series A preferred stock offering completed earlier this month and proceeds from a bridge loan secured by the company’s recently acquired Hilton Glendale. Eagle Hospitality chief executive Bill Blackham says the property is one of only two all-suite hotels in the market, the hotel has demonstrated considerable improvement in results and penetration within the market since 2001, when its convention center closed. The new $400-million, 580,000-sf Puerto Rico Convention Center will open later this year. “With strong occupancy trends and the positive impact in group-related bookings anticipated as a result of the new convention center opening late this year, we believe there is an opportunity to improve the revenue mix of the hotel,” Blackham says.In fiscal 2004, Puerto Rico posted a record 1.4 million non-resident hotel registrations, up 10% over the 1.25 million registrants in fiscal 2001. Additionally, 1.4 million cruise passengers visited Puerto Rico in fiscal 2004. Formed last year, Eagle Hospitality owns 12 upscale full-service and all-suite hotels encompassing approximately 3,200 guestrooms. The hotels are located in Arizona, California, Colorado, Florida, New York, Kentucky, Ohio, Illinois and Puerto Rico.