Equity Inns, a hotel real estate investment trust (REIT), today announced that it has entered into an agreement to purchase two hotels from two limited partnerships that are managed by LinGate Hospitality Group of Owensboro, Kentucky. Equity Inns will acquire a Marriott Courtyard in Dalton, Georgia, the carpet industry capital of the world, with 93 rooms. In addition, Equity Inns will acquire its first Hilton Garden Inn located in Louisville, Kentucky in one of the areas major corporate office parks, with 112 rooms. Both hotels are five years old, and the total purchase price will be approximately $14 million, which represents a capitalization rate of approximately 10.0% on trailing twelve months net operating income.
Equity Inns estimates that the impact of the hotels will be positive to its 2005 funds from operations (“FFO”). The transaction is expected to close during the fourth quarter 2004.
Phillip H. McNeill, Sr., Chief Executive Officer and Chairman of the Board commented, “We are excited about adding these high quality properties at a purchase price below their replacement values. Both properties are ideally located, with great visibility from major Interstate highways. The hotel in Dalton is considered the premier upscale property in that area of the city, while the Louisville property is located in the heart of a major office and industrial park. This transaction not only fits our strategy of buying assets in the upscale segment and generating additional value from the assets over time, but should improve our acquisition pipeline in the coming years.”
Glenn Higdon, the President of both general partnerships, through a network of companies, develops, builds and manages hotels. Higdon’s portfolio is currently comprised of 20 hotels, including 15 Marriott-branded hotels and five Hilton-branded hotels. All 20 hotels are managed by LinGate, which is a group founded and led by Higdon. LinGate will manage the acquired hotels for a minimum of three years under an incentive based management fee.
Howard A. Silver, President and Chief Operating Officer added, “We are pleased to embark on a relationship with Mr. Higdon and LinGate, a quality management company with a strong presence in the Southeast and Southwest. Additionally, the relationship we have forged with this group should lead to additional acquisition opportunities from a group focused on developing hotels of our core brands.”
When the transaction is complete, Equity Inns will own 106 hotels.