Equity Inns, Inc. (NYSE: ENN), a hotel real estate investment trust (REIT), today announced that it has contracted to purchase two Marriott Courtyards and three Residence Inns by Marriott and sold two exterior corridor Hampton Inns.
The Marriott Courtyards include a 78-room hotel in Asheville, North Carolina and a 105-room hotel in Athens, Georgia, for $12.7 million. The Residence Inns by Marriott include a 76-suite hotel in Chattanooga, Tennessee, a 78-suite hotel in Knoxville, Tennessee and a 66-suite hotel in Savannah, Georgia for $22.9 million. The average age of these five properties is approximately seven years. The transaction was executed at an average cap rate of 10.0% on a trailing twelve-month cash flow basis. The hotels are being acquired from McKibbon Hotel Group, Inc., a hotel developer and management company.
As part of the acquisition, McKibbon Hotel Management, Inc. will continue to manage the hotels with incentive-based management contracts. McKibbon currently manages 37 hotels in seven states, primarily Marriott Courtyards and Residence Inns.
The transaction is expected to close during the second quarter of 2004.
The Company also announced the sale of two exterior corridor Hampton Inn hotels to two separate private investor groups. The first was a 97-room Hampton Inn hotel in Sarasota, Florida for $2.95 million and the second was a 122-room Hampton Inn hotel in Jacksonville, Florida for $4.85 million. Both hotels are 17 years old. The transactions were executed at a capitalization rate of approximately 5.0% on a trailing twelve-month cash flow basis.
When these transactions are complete, Equity Inns will own 100 hotels.
Phillip H. McNeill, Sr., Chief Executive Officer and Chairman of the Board commented, “We are pleased to partner with McKibbon Hotel Management once again on what we expect will be another successful acquisition. The purchase of these five properties reflects our strategy of buying assets in the upscale segment and generating additional value from the assets over time. Our strong balance sheet enables us to constantly upgrade our portfolio and take full advantage of opportunities as they arise.”
Howard Silver, President and Chief Operating Officer, commented, “The sale of these two properties was a function of the Company`s desire to reduce its holdings of certain exterior corridor hotels. We will continue to rebalance our hotel portfolio and make acquisitions or divestitures, as we seek to reduce the average age of our properties and create value for our stockholders.”
Equity Inns, Inc. is a self-advised REIT that focuses on the upscale extended stay, all-suite and midscale limited-service segments of the hotel industry. The Company owns 91 hotels with approximately 11,778 rooms located in 34 states. For more information about Equity Inns, visit the Company`s Web site at www.equityinns.com.