NexPoint Hospitality Trust (TSXV: NHT.U) and Condor Hospitality Trust, Inc. (NYSE American: CDOR) today announced the execution of a definitive agreemen, under which NHTs operating partnership, NHT Operating Partnership, LLC, will acquire all of the outstanding equity interests of Condor and its operating partnership by merger. The total consideration payable pursuant to the transaction is approximately US$318 million, which will be satisfied by a combination of cash and debt, including the assumption of certain debt.
- In line with NHTs growth strategy, NHT will acquire 15 select-service and extended stay hospitality properties, representing 1,908 guestrooms across eight U.S. states (the Portfolio).
- The transaction will expand NHTs geographic footprint into Georgia, Kansas, Kentucky, Maryland, Mississippi and South Carolina and increase its presence in Florida and Texas.
- Following closing of the transaction, NHTs gross asset value is expected to increase to approximately US$700 million.
- The merger consideration of US$11.10 per share to be paid to holders of shares of common stock represents a premium of approximately 34% over Condors unaffected share price of US$8.27 as of July 19, 2019, the most recent trading day before the public announcement of the proposal to acquire Condor.
Were excited about NexPoint Hospitality Trusts strategic merger with Condor Hospitality Trust. The transaction instantly expands NHTs geographical footprint and balances NHTs strategic value-add portfolio with durable, core, extended-stay hotels. stated NHTs Chief Executive Officer, Jim Dondero. We believe the future for quality extended-stay and select-service hotels remains bright.
Bill Blackham, Condors Chief Executive Officer, commented: We are pleased with our strategic alternatives process concluding with a transaction we believe is attractive for our shareholders. NHT is acquiring our very high quality portfolio of outperforming select service hotels and Condor shareholders are receiving a liquidity event at an attractive premium to our unaffected share price prior to the transaction announcement.
Key Transaction Terms
- Completion of the transaction, which is expected to occur in the fourth quarter of 2019, is subject to customary closing conditions, including the approval of Condors common and preferred shareholders. There can be no assurances that any such conditions will be satisfied or waived or that the acquisition of the Portfolio will be completed.
- NHT OP has entered into voting agreements with certain shareholders of Condor that hold approximately 53% of the outstanding common shares and 100% of the preferred shares of Condor, pursuant to which, such holders have agreed to vote their shares of Condor in favor of the transaction.
- The transaction is not contingent on receipt of financing. NHT OP has entered into an equity commitment letter with NexPoint Advisors, L.P. (NexPoint), pursuant to which NexPoint has agreed to provide equity financing for the purchase price payable under the Merger Agreement (the Equity Financing). In addition to the Equity Financing, NHT will assume approximately US$8.65 million of in-place property level mortgage financing and expects to obtain secured financing to finance a portion of the purchase price and refinance certain debt of Condor.
- Upon closing of the transaction, holders of common stock of Condor would receive US$11.10, without interest thereon, per share, holders of 6.25% Series E Preferred Stock of Condor would receive US$10.00 per share and limited partners of Condors operating partnership, Condor Hospitality Limited Partnership (Condor OP), would receive US$0.21346 per Condor OP partnership interest.
- The transaction is an arms length transaction and no non-arms length party of NHT holds any interest in Condor or its assets.
- NHT expects to maintain its current quarterly dividend of US$0.075 per unit or US$0.300 per unit on an annualized basis.
Logos, product and company names mentioned are the property of their respective owners.