Equity Inns has signed a contract to purchase four Kentucky hotels with a total of 429 rooms from Musselman Hotels, LLC for $53.8 million.The purchase price represents a capitalization rate of approximately 10% based upon trailing twelve-month net operating income and includes the assumption of $27 million of existing debt. Musselman Hotels will retain management under a three year, performance based management contract.
The four properties include three hotels in the Lexington metropolitan area: a six-year old, 90-room Courtyard by Marriott in suburban Hamburg, a two-year old, 91-room Residence Inn also located in Hamburg and a two-year old, 108-suite SpringHill Suites-Downtown, which was named “SpringHill of the Year” at the 2006 Marriott franchise owner’s conference. The fourth property is a six-year old, 140-room Courtyard by Marriott in downtown Louisville, one block from the recently expanded Kentucky Convention Center. The Louisville purchase also includes a 250-space parking garage adjacent to the property that serves the hotel and the many surrounding businesses and attractions in the downtown area.
Mr. Howard Silver, President and CEO, commented, “This transaction creates significant value for our shareholders in a number of ways. First, the purchase price for these well-located assets is attractive and immediately accretive. With an average age of four years and with strong upscale brands, this purchase continues our strategy of acquiring younger, premium branded hotels for our portfolio. We also believe that establishing a relationship with the Musselman Group, a top-tier hotel developer and operator, will provide us access to additional quality acquisition opportunities over time.”
The Company expects to close the transaction by the end of the fourth quarter of this year.