The purchase price reflects an approximate 11% capitalizationrate, after capital reserves and management fees, of the 2000estimated cash flow of the hotels to be sold or a multiple of 8xearnings before interest, taxes, depreciation and amortization(Ebitda). Upon closing, Lodgian will reduce its annual interestexpense by more than $11 million, based on current interestrates.


Proceeds of the sale will be used substantially to pay downdebt. The closing of the deal, which is subject to customaryclosing conditions, is expected to occur no later than September30. The Portland-area hotels include the Marriott City Center, theHilton Garden Inn in Lake Oswego and the Holiday Inn Select southof Wilsonville.


The company expects to record a pre-tax loss associated with thesale of approximately $50 million. There are other potentialtransactions in various stages disposition pipeline that couldresult in gains that would somewhat offset this loss, the companysaid.


Lodgian (NYSE:LOD) currently owns or manages 128 hotels in 35states and Canada. Most of the hotels are affiliated withhospitality brands such as Holiday Inn, Crowne Plaza, Marriott,Sheraton, Hilton, Doubletree and Westin. Lodgian stock was up 12.5cents to $2.69 in noontime trading Wednesday.

Want to continue reading?
Become a Free ALM Digital Reader.

  • Unlimited access to GlobeSt and other free ALM publications
  • Access to 15 years of GlobeSt archives
  • Your choice of GlobeSt digital newsletters and over 70 others from popular sister publications
  • 1 free article* every 30 days across the ALM subscription network
  • Exclusive discounts on ALM events and publications

© 2024 ALM Global, LLC, All Rights Reserved. Request academic re-use from All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.