Urban Commons Picks Up Embassy Suites for $25M
Save the date: RealShare Orange County comes to the Hyatt Regency Irvine on August 22.
(Save the date: RealShare Apartments comes to the Westin Bonaventure, Los Angeles, October 24.)
ANAHEIM, CA-FelCor Lodging Trust Inc. has sold the 222-room Embassy Suites—Anaheim-North for $25.5 million to Urban Commons LLC. The move is part of FelCor’s long-term portfolio repositioning strategy, which includes the sale of 39 non-strategic hotels, nine of which the firm is currently marketing.
Stephen Schafer, FelCor’s VP strategic planning and investor relations, tells GlobeSt.com that the firm is not currently in the market for acquisitions at this point. “We had three target markets: Boston, New York and Washington, DC. We’ve accomplished the acquisitions we wanted in Boston and New York, and no acquisitions ever made sense for us in DC—that may come up down the road. So we’re happy with what we have in terms of our portfolio.”
In 2010, the firm purchased the Fairmont Copley Plaza in Boston, and in 2011 purchased the Morgans New York and the Royalton New York in Manhattan, as well as the Knickerbocker Hotel in New York’s Times Square, which it is redeveloping. FelCor has sold nine hotels since December 2010 (out of 15 hotels initially brought to market in late 2010) for total gross proceeds of $138 million and used $80 million of those proceeds to repay indebtedness secured by four of those hotels and the remainder to repay other indebtedness.
According to the company, it continued to reinvest in its portfolio throughout 2011, spending $92 million, primarily to renovate six hotels and redevelop significant portions of the Fairmont Copley Plaza and Morgans. Work at the Fairmont Copley Plaza is expected to be completed this year in order to reposition the hotel closer to its luxury competitors, including upgrading 12 rooms to Fairmont Gold, adding a new rooftop fitness center and spa, and redeveloping the food and beverage outlets and the public areas.
In early 2012, the firm began marketing an additional 10 hotels for sale. As those are sold, FelCor expects to use a substantial amount of the net proceeds to repay outstanding debt and to repay all the accrued preferred dividends.
The company’s current repositioning strategy is toward upper-scale hotels in major urban resort markets, Schafer adds. “The ones we’re keeping generally are in very good condition, good quality and in very good markets with high barriers to entry. At the end of the day, the health of this industry is all about supply.”
As GlobeSt.com previously reported, in February a newly-formed joint venture between FelCor and Highgate Foldings was preparing to renovate the Knickerbocker Hotel after purchasing it. The exterior will remain unchanged.
For more insight on lodging and hospitality sector, check out GlobeSt.com's NEW columnist, HREC Investment Advisors' Geoffrey E. Davis, as he provides insights on the current state of hotel investment.
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