MeriStar Hospitality to Sell 10 Florida Assets
BETHESDA, Md., February 1, 2006 — MeriStar Hospitality Corporation (NYSE: MHX), one of the nation’s largest hotel real estate investment trusts (REIT), today announced that it has signed a definitive agreement to sell a portfolio of nine hotels (1,948 rooms) and a golf and tennis club, all located in Florida, to an affiliate of The Blackstone Group for approximately $367 million in cash, subject to certain adjustments and satisfaction of customary closing conditions. The company expects the transaction to close by the end of the first quarter 2006. The company intends to use the majority of the proceeds to further reduce debt, particularly its most expensive 10.5 percent senior unsecured debt, which currently is callable by the company.
The properties to be sold include:
- Best Western Sanibel Island Beach Resort (46 rooms)
- The Dunes Golf & Tennis Club
- Hilton Cocoa Beach Oceanfront (296 rooms)
- Hilton Clearwater Beach Resort (426 rooms)
- Sanibel Inn (96 rooms)
- Seaside Inn (32 rooms)
- Sheraton Beach Resort Key Largo (200 rooms)
- Song of the Sea (30 rooms)
- South Seas Island Resort (579 rooms)
- Sundial Beach Resort (243 rooms)
“We expect this portfolio sale to generate significant benefits for our shareholders by allowing us to accelerate our business plan objectives of repaying our more expensive debt and completing property upgrades,” said Paul Whetsell, chairman and CEO. “Furthermore, with the closing of this transaction, our asset disposition program will be nearly complete. As a result of this transaction we will have significantly greater financial flexibility and greater visibility on the timing of restoring a regular cash dividend to our common shareholders. We are pleased to be able to take advantage of the strong real estate market in Florida and unlock the substantial values in these assets for our shareholders.” The sales price reflects an EBITDA multiple for the 10 properties that is accretive to the company’s current trading value.
Bethesda, Md.-based MeriStar Hospitality Corporation owns 58 principally upper-upscale, full-service hotels in major markets and resort locations with 17,003 rooms in 19 states and the District of Columbia. The company owns hotels under such internationally known brands as Hilton, Sheraton, Marriott, Ritz-Carlton, Westin, Doubletree and Radisson. For more information about MeriStar Hospitality, visit the company’s website: www.meristar.com.
This press release contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. Forward-looking statements, which are based on various assumptions and describe our future plans, strategies and expectations, are generally identified by our use of words such as “intend,” “plan,” “may,” “should,” “will,” “project,” “estimate,” “anticipate,” “believe,” “expect,” “continue,” “potential,” “opportunity,” and similar expressions, whether in the negative or affirmative. We cannot guarantee that we actually will achieve these plans, intentions or expectations. All statements regarding our expected financial position, business and financing plans are forward- looking statements. Except for historical information, matters discussed in this press release are subject to known and unknown risks, uncertainties and other factors which may cause our actual results, performance or achievements to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements.
Factors which could have a material adverse effect on our operations and future prospects include, but are not limited to: economic conditions generally and the real estate market specifically; supply and demand for hotel rooms in our current and proposed market areas; other factors that may influence the travel industry, including health, safety and economic factors; competition; the level of proceeds from asset sales; cash flow generally, including the availability of capital generally, cash available for capital expenditures, and our ability to refinance debt; the effects of threats of terrorism and increased security precautions on travel patterns and demand for hotels; the threatened or actual outbreak of hostilities and international political instability; governmental actions, including new laws and regulations and particularly changes to laws governing the taxation of real estate investment trusts; weather conditions generally and natural disasters; rising insurance premiums; rising interest rates; and changes in U.S. generally accepted accounting principles, policies and guidelines applicable to real estate investment trusts. These risks and uncertainties should be considered in evaluating any forward-looking statements contained in this press release or incorporated by reference herein. All forward-looking statements speak only as of the date of this press release or, in the case of any document incorporated by reference, the date of that document. All subsequent written and oral forward-looking statements attributable to us or any person acting on our behalf are qualified by the cautionary statements in this section. We undertake no obligation to update or publicly release any revisions to forward-looking statements to reflect events, circumstances or changes in expectations after the date of this press release.