WEST PALM BEACH, FL-In what is the first—and what could be the largest—such deal in 2011, Innkeepers USA, a real estate investment trust and owner of upscale extended-stay hotel properties, is looking for a buyer to take it out of Chapter 11 bankruptcy.
The company filed a motion on Jan. 14 asking the court for permission to accept a stalking horse bid submitted by Five Mile Capital II Pooling REIT/Lehman ALI. The bidder would purchase Innkeepers’ entire portfolio, valued at $1.4 billion.
"The company's performance continues to improve with the overall sector,” Marc Beilinson, Innkeepers Chief Restructuring Officer, tells GlobeSt.com. “Innkeepers offers a large scale investment opportunity with expansion and platform potential. We expect a high degree of interest in the marketing process."
The United States Bankruptcy Court for the Southern District of New York has scheduled a hearing for March 8 to consider approval of the stalking horse bid, bidding procedures governing an auction at which overbids will be solicited, and a break-up fee to Five Mile/Lehman if the company completes a transaction other than the stalking horse bid.
“The company can and will continue to fully consider all other value-maximizing restructuring proposals it may receive, whether for enterprise-based transactions, asset pools or individual assets,” says Beilinson. “Our process is ongoing and we are actively soliciting interest, both in advance of the March hearing and afterward, in
accordance with the bid procedures, if approved at the hearing.”
Innkeepers retained Moelis & Company as its exclusive financial advisor for the potential transaction. "We have and expect very robust interest in the portfolio,” Bill Derrough, managing director and co-head of Recapitalization and Restructuring Group at Moelis & Company, tells GlobeSt.com. “Given the size and timing of the deal, we further expect that Innkeepers will set a positive tone for 2011 lodging M&A."
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