Equity Inns, Inc. the third largest hotel real estate investment trust (REIT), announced today that it has entered into an agreement to purchase five Marriott branded hotels containing 435 rooms from partnerships controlled by McKibbon Hotel Group, a hotel developer and management company for a total price of $45.5 million or $105,000 per room. The transaction price includes the assumption of $15.7 million of existing debt with an average coupon rate of 7.8%.
The acquired hotels include 3 hotels in Florida, a Residence Inn in Tampa, a SpringHill Suites in Sarasota, and a Courtyard by Marriott in Orlando. Additionally, the Company will acquire a Residence Inn in Mobile, Alabama, and the Company's first TownePlace Suites hotel, which is located in Savannah, Georgia. The five hotels are being acquired at an average capitalization rate of approximately 9.7% on a trailing 12-month net operating income basis and have an average age of seven years.
McKibbon Hotel Management, Inc. will continue to manage the properties under similar terms as previously negotiated management agreements.
Howard Silver, President and Chief Executive Officer commented, "We are pleased to expand our presence in Florida and Georgia with these Marriott branded hotels. The hotels complement our strategy of owning properties with multiple demand generators and build upon our momentum of buying newer hotels in the upscale, select service lodging category. Moreover, given the recent escalation in construction related material and labor costs, the portfolio cost per key represents a slight discount to replacement cost."
Mr. Silver added, "While the acquisition does increase our portfolio investment in the Florida market (currently 17% of Equity Inns' assets), we believe any concentration risk is mitigated by the fact that our hotels are dispersed in nine of the state's largest Metropolitan Statistical Areas."
When these transactions are finalized, the Company will own 128 hotels with 15,223 rooms in 36 states.
The Company expects to close on the properties by the end of the first quarter 2006.
About Equity Inns
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, which ranks as the third largest hotel REIT based on number of hotels, currently owns 123 hotels with 14,788 rooms located in 36 states. For more information about Equity Inns, visit the Company's Web site at www.equityinns.com.