Interstate Hotels & Resorts (NYSE:IHR) , one of the nation's largest independent hotel management companies, announced that it has signed a definitive agreement to acquire the 495-room Westin Atlanta Airport in Georgia for $74 million, or $149,500 per key, from affiliates of The Blackstone Group. It is the company's largest single asset acquisition and its sixth wholly-owned property. Interstate plans to spend an additional $18 million for major renovations of the guest rooms and common areas. The company will finance the transaction with cash on hand and with funds drawn on its line of credit. Closing is expected to occur later in the second quarter.
“This is a well-maintained, high-profile, airport property in one of the largest and most economically important cities in the southeastern U.S.,” said Thomas F. Hewitt, Interstate chief executive officer. “We have operated this hotel for nine years and are confident that the transition will be seamless. At less than $150,000 per key, it is priced well below replacement cost and represents a very attractive opportunity with compelling economics and the potential to generate significant long-term shareholder returns. With the planned infusion of $18 million to upgrade the guest rooms and all common areas, we expect this upscale hotel to reach its full potential and assume a larger leadership role in this market.”
“This is our first Westin acquisition and further solidifies our already strong relationship with Starwood,” said Leslie Ng, chief investment officer. “The purchase represents a continuation of our successful strategy to diversify our revenue base beyond management fee income with wholly-owned and joint venture real estate investments. We continue to seek other well- located, quality assets in high-barrier-to-entry markets with significant upside potential at attractive, competitive pricing.”
Located at 4736 Best Road, in the southern Atlanta suburb of College Park, the Westin Atlanta Airport is adjacent to I-85 and I-285, a short drive to the Georgia International Convention Center, and eight miles from downtown Atlanta and other area attractions.
The 495 luxury guest rooms feature Westin's signature Heavenly Bed(R), the Heavenly Shower(R)/bath and high-speed Internet access. Among the hotel's amenities are a full-service restaurant, Palio's Mediterranean Bistro, serving three meals a day; Martini's Lounge, offering a full-service lunch and dinner menu; a business center; fitness center; indoor/outdoor pool and whirlpool; and 23,000 square feet of flexible meeting and banquet space.
“In addition to its superb location and high visibility, there are a number of factors which will positively impact demand at this property, including approximately 3.2 million square feet of office construction across the metro Atlanta area and a significant expansion of Atlanta Hartsfield Airport, including the addition of a fifth runway, ” Ng added. “These are in addition to existing nearby demand generators, including three professional sports venues, Centennial Olympic Park, home of the 1996 Summer Olympic Games, the Georgia World Congress Center and the four-year old Georgia International Convention Center. This hotel is the one of the closest full service hotels to the convention center, and we expect to benefit from the increased activity the convention center will experience as it continues to mature.”
As of April 30, 2007, Interstate Hotels & Resorts operated 202 hospitality properties with more than 46,000 rooms in 36 states, the District of Columbia, Belgium, Canada, Ireland and Russia. In addition, Interstate Hotels & Resorts has contracts to manage 13 hospitality properties with 4,000 rooms currently under development.