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Equity Inns Enters California with $22M Buy

CARSLBAD, CA-The nation's third largest hotel REIT picks up a local Marriott Courtyard. In the deal, the Memphis, TN-based firm acquires the property from Huntington Hotel Group.

By Daniel D. Williams | Updated on September 15, 2005

CARSLBAD, CA-Equity Inns Inc., the nation’s third largest hotel REIT, enters California with its purchase of a local Marriott Courtyard. In the deal, the Memphis, TN-based firm paid Huntington Hotel Group $22 million for the property.”This transaction allows us to expeditiously enter a new market with high barriers to entry,” says Howard Silver, president and CEO of Equity Inns. He adds that the firm will continue to seek out additional acquisitions “to further diversify our portfolio geographically, to better position us to create shareholder value over the long-term.” Besides this California buy the company is expanding into other new areas. Last month, Equity Inns entered the Boston market with the $15.2 million buy of two Hilton branded hotels. In all, Equity Inns owns 123 hotels with 14,788 room located in 36 states.Under the terms of the Carlsbad deal, Equity Inns will take over the five-year-old, 145-room property. Huntington Hotel Group will stay on as property manager on a three-year, performance-based management contract. According to a report released last week by Ernst & Young’s Hospitality Services Group, California’s major hospitality markets are showing strong growth, “a trend that is expected to continue into 2006.”The report added that one trend in the hospitality market that’s having an affect on existing inventory is the converting of hotels to residential condos. Baby boomers are leading the charge in demanding more for-sale property.Among California’s leading hospitality markets, San Diego posted the highest increase in average daily room rates at 8%, but “occupancy increased only 1% due to a 2.5% growth in the supply of new hotel rooms.” The report concluded, however, by stating that San Diego remains the overall top hotel market in California in terms of RevPAR.

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