Equity Inns, a hotel real estate investment trust, today announced that it has entered into an agreement to purchase two Hilton branded hotels for $15.2 million, or $74,000 per room. This purchase price includes an additional investment of $1.1 million for the refurbishment of the hotels. Acquisition of the hotels will follow the satisfactory completion of due diligence, and the transaction is expected to close during the third quarter 2005. The Company expects that the acquisition of these hotels will be slightly accretive to its 2005 funds from operations (FFO).
Equity Inns will acquire a Homewood Suites and a Hampton Inn in Peabody, Massachusetts, a suburb 12 miles north of downtown Boston. Collectively, the two hotels have an average age of six years and will add 206 rooms to the Company’s hotel portfolio. Paramount Hotel Group, who sourced the acquisitions to the Company, will continue to manage the properties under a three year agreement which will include property specific performance thresholds. In addition to the Peabody properties, Paramount Hotel Group manages 29 hotels primarily in New England and the Mid-Atlantic.
Howard Silver, President and Chief Executive Officer commented, “With the acquisition of these two Hilton properties, we are entering the Boston area for the first time and, we believe, at a good time. This market is starting to experience a healthy rebound from the latest industry downturn. We are acquiring well-located properties at a significant discount to their replacement value. Furthermore these properties will undergo a total refurbishment, which, together with the improving market, bodes well for attractive returns over the long term to the Company and our shareholders.”
When this transaction is finalized, the Company will own 118 hotels with 14,267 rooms in 35 states.