FelCor's newest gems are the 560-room Renaissance Esmeralda Resort & Spa at 44-400 Indian Wells Lane in Indian Wells, CA and 361-room Renaissance Vinoy Resort & Golf Club at 501 Fifth Ave. NE in St. Petersburg, FL. In taking the deeds, FelCor inked a new long-term management pact for the resorts' long-time management company, Bethesda, MD-based Marriott International Inc.
The $244,000 per key purchase is 13 times the hotels' projected 2008 EBITDA, according to the local REIT. Also, the two resorts' projected 2008 RevPAR is $140 or 47% more than the rest of FelCor's current portfolio.
The industry-acclaimed Renaissance Esmeralda Resort & Spa sits on 70 acres at the base of the Santa Rosa Mountains. Amenities include 90,000 sf of meeting space, inside and out, a 12,000-sf spa, tennis facility and award-winning restaurants plus its part of the Indian Wells Golf Resort, which recently underwent an $80-million renovation.
The Renaissance Vinoy Resort & Golf Club, which opened in 1925, is on the National Register of Historic Places. Its amenities include 50,000 sf of indoor and outdoor meeting space, 74-slop, tennis facility, day spa, historical museum and private club. The Renaissance Vinoy is one of just a few luxury footprints on Florida's West Coast.
FelCor has spent roughly two years positioning itself financially to acquire upper-upscale hotels in select markets. In May's earnings call, Richard A. Smith, the REIT's president and CEO, told shareholders that the disciplined approach to the strategy meant that buying would soon begin--with dispositions about to wrap up and a portfolio-wide renovation program well under way.
"These two hotels meet our stated strategy to continue to improve the overall quality of the portfolio," Smith says in the release about the Renaissance acquisitions. To make the close, FelCor assumed $177 million of debt at an interest rate of 155 basis points over Libor and paid the $48 balance with cash on hand. The loan, maturing in 2012, has interest-only payments.
"From a value perspective, we are acquiring hotels with IRRs that exceed our weighted average cost of capital, will provide the portfolio with higher, future EBITDA growth and will be accretive to FFO in 2008," Smith continues. And in both cases, he says the door is open for "various redevelopment opportunities" to upgrade existing components like spas and pools and develop the extra land. Hodges Ward Elliott represented the sellers.
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