Boykin Lodging Company (NYSE: BOY), a multitenant hotel real estate investment trust, announced that it and Radisson Hotels Worldwide have formed a joint venture called RADBOY Mt. Laurel, L.L.C., which has acquired the Radisson Hotel in Mount Laurel, New Jersey, a suburb of Philadelphia. The hotel was purchased for $23.24 million, or approximately $82,000 per room, which is a significant discount to its replacement cost.
Under the terms of the joint venture, Radisson invested approximately $3.5 million for a 15 percent interest in the hotel property, which was acquired from an unrelated third party. The joint venture has leased the property to Radisson, which will manage the hotel under the Radisson brand.
The Radisson Hotel Mount Laurel is located in the heart of southern New Jersey’s industrial and business center, just ten miles from downtown Philadelphia, four miles from Garden State Racetrack, seven miles from New Jersey State Aquarium, and 20 minutes from Philadelphia International Airport. Easily accessible along Route 73 between Interstate 295 and the New Jersey Turnpike, the hotel is only a short drive from the area’s most noted business and leisure destinations. The hotel has 283 newly renovated, spacious guest rooms and a full complement of upscale hotel amenities, including concierge levels, an onsite fitness center, free parking, an outdoor pool, tennis and basketball courts, a gift shop, and 12,000 square feet of renovated meeting and banquet space. Ashley’s Restaurant features critically acclaimed American cuisine in a full-service setting, and Legends Lounge serves light meals and cocktails.
The hotel completed a $4 million renovation in April 1997 and began to operate under the Radisson flag at that time. Since affiliating with Radisson, the hotel has shown dramatic improvement in both average daily rate and occupancy.
“This excellent hotel is situated in a strong market with a vibrant business community,” said Robert W. Boykin, chairman, president and chief executive officer of Boykin Lodging Company. “We believe this hotel’s occupancy rate has considerable upside potential, and we expect to spend approximately $1 million for certain upgrades over the next year in an effort to position the property to achieve full market penetration. We expect EBITDA yield for this hotel to exceed 12.5 percent in the first year.”
“This is Boykin Lodging’s first joint venture with Radisson and our first joint venture with a partner that is the hotel brand, manager, lessee, and equity partner rolled into one,” Mr. Boykin said. “This acquisition will allow us to develop a stronger relationship with Radisson, one of the nation’s largest and most respected lodging companies. We look forward to working with Radisson on pursuing similar opportunities that will enhance our portfolio of Radisson-branded properties. The joint venture/lease structure we have forged is profitable to both parties and creates true alignment of interests with our shareholders.”
Eric Danziger, president of Carlson Hotels Worldwide, which includes Radisson Hotels Worldwide, added, “Boykin Lodging is an ideal strategic partner as we move forward with a renewed emphasis on management and ownership of Radisson hotels. We look forward to building our relationship with Boykin through similar arrangements in the future.”
“This location is one in several key cities Radisson has identified for strategic expansion,” added Brian Stage, president of Radisson Hotels Worldwide. “We now have more than 360 hotels in 46 countries, and Radisson’s global growth will continue with the help of strong relationships like our partnership with Boykin.”
Minneapolis-based Radisson Hotels Worldwide and its parent Carlson Hospitality Worldwide include 500 lodging locations in 49 countries, plus four cruise ships sailing worldwide. Carlson Hospitality Worldwide is one of the major operating groups of Carlson Companies, Inc. Other Carlson Companies groups include Carlson Marketing Group, a worldwide marketing services company operating in 17 countries; Carlson Leisure Group, responsible for leisure travel ventures around the globe; and Carlson Wagonlit Travel (co-owned with Accor Group of Paris), a world leader in business travel management. Carlson’s travel agency interests include 5,300 travel locations in more than 140 countries around the world.