The duo--which have teamed up for the first time in this transaction--are acquiring the properties from affiliates of The Blackstone Group LP. They are: the 321-room Hilton Seelbach Louisville in Kentucky; a 226-key Crowne Plaza Madison in Wisconsin; and a 288-unit Sheraton Columbia in Maryland.
It is the Sheraton Columbia that Interstate is buying separately within the JV, Ng says. It is acquiring the property for $46.5 million, a sum that is part of the total $118 million paid for the three properties. Interstate is tapping available cash and capacity under its senior revolving credit facility to fund the transaction, which is expected to close in the fourth quarter.
"Sheraton Columbia is a value add play--we will be investing $12 million to completely renovate the hotel," Ng explains. The capital improvements, which will include upgrades to all guest rooms and public spaces, are expected to be completed by the end of 2008.
Interstate will invest $4.7 million in exchange for a 15% equity interest in the Hilton Seelbach and the Crowne Plaza Madison. Opened in 1905, the Seelbach Hilton Louisville is four-diamond property home to Kentucky's only five-diamond restaurant, the Oak Room. The 226-room Crowne Plaza was renovated in 2005 and features an indoor pool, restaurant and lounge, a business center and more than 6,800 sf of meeting space. <
These two properties will be managed by Interstate under new management agreements. "With the capital improvements we are planning for all three hotels we expected to see strong performance from these three properties in the coming years," Ng says.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
