Boykin Lodging Company (NYSE: BOY), a multitenant hotel real estate investment trust, announced the completion of its acquisition of Red Lion Inns, L.P., and Red Lion’s ten full-service DoubleTree Hotels.
Boykin Lodging paid $35.3 million in cash and issued 3.1 million of its common shares to the Red Lion unitholders in the transaction. Based upon the closing price of Boykin’s common shares on May 21, 1998, the total cost of the transaction, including assumed liabilities, was approximately $257 million in cash and stock, or approximately $84,000 per room.
Boykin funded a portion of the cash consideration in the transaction through a $130 million fixed-rate loan secured by the ten DoubleTree hotels. The interest rate on the note is fixed at 6.9 percent for ten years, with interest-only during the first two years of the loan.
“In addition to adding ten strong, profitable full-service hotels to our portfolio, this acquisition will allow us to develop a meaningful strategic relationship with Promus Hotel Corporation, one of the nation’s largest and most respected lodging companies and the owner of the DoubleTree brand,” said Robert W. Boykin, chairman, president and chief executive officer of Boykin Lodging Company. “Promus owns, operates or franchises more than 1,200 hotels, with approximately 177,000 rooms throughout the United States,
Canada, Mexico and Latin America. We look forward to working with Promus to maximize the success of our newest hotels and look forward to pursuing opportunities that will enhance our portfolio of DoubleTree branded properties.”
“We are also pleased to have negotiated such favorable financing at a historically low interest rate,” Mr. Boykin added.
The acquired portfolio comprises ten upscale, full-service hotel properties that range in size from 208 rooms to 476 rooms and contain a total of 3,062 rooms. The hotels, which operated as “Red Lion Hotels” or “Red Lion Inns,” were reflagged in June 1997 to operate as “DoubleTree Hotels.” They are located in growing commercial markets in Portland, Oregon (476 rooms at Lloyd Center and 235 rooms downtown), Springfield, Oregon (234 rooms), Sacramento, California (448 rooms), Boise, Idaho (304 rooms), Spokane Valley, Washington (237 rooms), Bellevue, Washington (208 rooms), Yakima, Washington (208 rooms), Colorado Springs, Colorado (299 rooms), and Omaha, Nebraska (413 rooms). The hotels are situated in major traffic arteries that are near airports, commercial centers, and tourist sites. Each of the hotels offers full-service accommodations, including meeting spaces, lounges, and banquet facilities, and most have at least two restaurants. The hotels typically offer valet service, swimming pools, health and fitness centers, concierge services, business centers and complimentary airport shuttle services.