FelCor Lodging Trust Incorporated (NYSE: FCH) today announced that it has agreed to sell the 222-room Embassy Suites – Anaheim-North hotel for $25.5 million. Urban Common, the purchaser, has made a $1.3 million hard money deposit toward the purchase price. The sale is expected to close in late August. FelCor will use the net proceeds to repay a portion of the $88 million balance on the CMBS loan that matures in 2013.
As part of its long-term portfolio repositioning strategy, which includes the sale of 39 non-strategic hotels, FelCor is currently marketing 10 hotels, including the hotel announced today. Including this sale, FelCor will have sold 16 of the 25 hotels that it has brought to market since December 2010.
About FelCor
FelCor, a real estate investment trust, owns 70 primarily upper-upscale, full-service hotels that are located in major and resort markets throughout 22 states. FelCor partners with leading hotel companies to operate its diversified portfolio of hotels, which are flagged under globally recognized names such as, Doubletree®, Embassy Suites®, Fairmont®, Hilton®, Marriott®, Renaissance®, Sheraton®, Westin® and Holiday Inn®, and premier independent hotels in New York. Additional information can be found on the Company's Web site at www.felcor.com.
Atlanta’s largest hotel is for sale — and could bring up to $400 million in what would be one of this year’s biggest hotel deals.
The Marriott Marquis, which has a total of 1,663 guest rooms, has sold just once since it was built in 1985.
Its owner, Bethesda, Md.-based Host Hotels & Resorts Inc. (NYSE: HST), is making moves to sell the downtown convention hotel. Host bought the Marquis for $229.5 million in January 1998, according to Databank Inc., an Atlanta firm that tracks real estate transactions. Jones Lang LaSalle Inc. is marketing the property.
The Marquis has 1,569 rooms, 94 suites, 61 meeting rooms and more than 28,000 square feet of exhibit space, according to the Atlanta Convention & Visitors Bureau. Famed Atlanta architect John Portman designed the hotel, which is well-known for its open atrium lobby.
“The architectural design of the building makes it unmatched to any other hotel,” said Mark Vaughan, executive vice president for the Atlanta Convention & Visitors Bureau. Vaughan served as director of marketing at the hotel from 1998 to 2001.
“Host has been a great owner,” he said. “They’ve invested significantly in that property. It’s certainly a hotel we all can be proud of in Atlanta.”
Host completed an approximately $140 million renovation of the Marquis in the summer of 2008.
And, in 2009, a pedestrian bridge was constructed to connect the Marquis to the Hilton Atlanta, which also is on the market and could fetch between$220 million and $280 million in a deal.
The Marquis also links to the Hyatt Regency Atlanta by a pedestrian bridge. Both connections in essence put around 4,000 hotel rooms under one roof, making those properties very attractive for hosting conventioneers and large events.
The recent improvements make the hotel prime for a sale, say local hospitality experts.
“The Marriott Marquis for sale makes a lot of sense,” said Paul Breslin, managing partner of hotel consulting firm Panther Hospitality LLC. “They’ve renovated, repositioned and refreshed. It’s the right time.”
Also, stronger market fundamentals and a low supply of new construction are helping make 2012 a good year to take assets to market.
“You can’t reproduce a 1,600-room hotel very easily,” said hospitality consultant Linda Wilson, president of Key Advisors Inc. She added that the Marquis is “one of the biggest players in the citywide convention business,” which makes the property attractive to buyers. Group bookings are on the rise in Atlanta, she said.
“During the recession, people just cut their costs,” Wilson said. “They didn’t attend conventions.”
But, she said, “it’s coming back. The pickup is much stronger from what they originally thought.”
Breslin estimated the hotel could sell for $250,000 to $280,000 per key. That could put a price tag of nearly $400 million on the property. He said it’s most likely that the Marriott brand would remain if the hotel traded hands.
“They’d never sell it without keeping the brand and management,” Breslin said.
Based on those figures, if the Marquis sells this year, it could be one of the largest hotel transactions in the United States.
Seven hotels have sold for more than $100 million across the country in first-quarter 2012, according to data from LW Hospitality Advisors LLC. The 934-room Park Central Hotel in New York City fetched the highest price, selling for an estimated $396 million to LaSalle Hotel Properties. That’s about $424,000 per key, according to the hospitality firm.
It’s a clear indication that large transactions are occurring, Wilson said.
“Publicly traded REITs, which were the largest buyers in 2011, have become less active due to low stock valuations,” Wilson said. “That leaves private equity firms as a prime target for the sale.”
Already this year, a handful of Atlanta hotels have sold. The 521-room Renaissance Waverly Hotel & Convention Center Atlanta sold for about $96 million in March, according to hotel consulting and appraisal firm HVS, which has an Atlanta office. The hotel is attached to the Cobb Galleria Centre, a 320,000-square-foot convention center, and Cumberland Mall.
Host Hotels did not respond to a request for comment about why it’s selling the Marquis.
The company has paid off its $164 million mortgage on the property, according to Alan Wexler with Databank.
Earlier this year, in an earnings call with investors, W. Edward Walter, Host’s chief executive, president and director, shared the company’s strategy for its portfolio.
“Recognizing that there has been a directive acquisition opportunities in North America, we are moving quickly to bring selected assets to the market, as we continue to look to recycle assets and improve the quality of our already outstanding portfolio,” Walter told investors on April 25.
In first-quarter 2012, Host sold its San Francisco Airport Marriott for about $113 million to Inland American Lodging Group Inc.
“While certainly a fine property in a top market, this sale was consistent with our strategy of reducing our exposure to noncore assets located in airport markets at attractive pricing,” Walter said. “The sale also permits us to avoid investing an incremental $15 million in capital improvements over the next couple of years.”
Host’s portfolio of more than 100 properties includes several other prominent Atlanta hotels: the Grand Hyatt Atlanta, The Westin Buckhead Atlanta, Four Seasons Hotel Atlanta, The Ritz-Carlton, Buckhead, JW Marriott Atlanta Buckhead, Atlanta Marriott Perimeter Center, and Atlanta Marriott
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