All-Residence Inn Package Located in Greater Cleveland Area
Interstate Hotels & Resorts (NYSE:IHR) , the nation's largest independent hotel management company, today announced that it will invest approximately $4 million to acquire a 15 percent minority interest in an 825-suite, six-hotel portfolio of Residence Inn by Marriott properties in the greater Cleveland metropolitan area. The investment includes Interstate's share of approximately $4 million earmarked for capital improvements. The company purchased the partnership interest from the portfolio's majority owner, Moreland Management, a privately held Cleveland-based investment group. Interstate began management of the properties in March 2006 in anticipation of the minority ownership investment.
"This portfolio matches up well with our strategy of owning real estate primarily by co-investing, and brings our equity investment portfolio up to 23 properties from 17," said Thomas F. Hewitt, Interstate chief executive officer. "We were able to acquire this minority interest in well-maintained, profitable assets with upside potential at an attractive price. This transaction offers a number of advantages. The properties will benefit from the implementation of our proprietary management and marketing programs. Interstate will benefit from various aspects of the transaction, including stabilized fee income generated by a long-term management contract, participation in the operating profits of the properties and the potential appreciation of the value of the real estate."
"The hotels in the portfolio are high-quality assets, in good condition, with three of the properties less than seven years old," said Leslie Ng, Interstate's chief investment officer. "Cleveland has undergone a renaissance over the past few years and is attracting growing numbers of business and leisure travelers. It also is a popular meeting, conference and trade-show destination, attracting nearly 9 million business travelers annually. With minimal new supply projected in this market for at least the next three years, we believe there is significant upside potential for both occupancy and rate."
The portfolio comprises the following hotel properties:
Property Rooms
Residence Inn Cleveland Downtown 175
Residence Inn Cleveland Airport 158
Residence Inn Cleveland Independence 118
Residence Inn Beachwood 174
Residence Inn Westlake 104
Residence Inn Mentor 96
Total rooms 825
