Company Concurrently Amends its Senior Secured Credit Facility
Interstate Hotels & Resorts (NYSE:IHR) , one of the nation's largest independent hotel management companies, today reported that it closed on the previously announced acquisition of the 495-room Westin Atlanta Airport Hotel in Georgia for $74 million, or $149,500 per key, from an affiliate of The Blackstone Group. It is the company's largest asset acquisition and its sixth wholly-owned property under its strategic plan to diversify its revenue base through increased real estate ownership. The company will immediately begin its planned $18 million renovation, to include all rooms and public areas.
Concurrently, the company announced that it has amended its senior secured credit facility to significantly expand the facility's capacity and provide greater flexibility in certain of its financial covenants. The total facility increased by $75 million to $200 million, the increase consisting of a $50 million term loan and a $25 million revolver. The interest rate of the expanded facility remained at LIBOR plus 275 basis points. The company used the additional $50 million term loan and cash on hand to finance the acquisition of the Westin Atlanta Airport Hotel.
"This amendment not only provides us with the sufficient capacity to acquire the Westin Atlanta Airport Hotel, but more importantly, the flexibility to continue to execute our strategic business plans, including the selective acquisition of wholly-owned and joint venture real estate investments," said Bruce Riggins, chief financial officer. "With this amendment we have the entire $85 million available on our revolving credit facility to fund our growth strategy and our operating needs."
"This is our third acquisition from Blackstone and represents a very attractive opportunity to add a major airport property in a key market to our owned portfolio at a competitive price," said Thomas F. Hewitt, chief executive officer. "The planned $18 million in upgrades to all guest rooms and common areas will further enhance its guest appeal and enable this hotel to reach its full potential."
As of April 30, 2007, Interstate Hotels & Resorts operated 203 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 nearly 4,000 rooms currently under development.
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