The new management team has resulted from Felcor owning the real estate and Bass Hotels & Resorts' March 2000 acquisition of Bristol Hotels' operational management entity, says Thomas J. Corcoran Jr., Felcor president and CEO. Interstate brings to the table a larger operation which, Corcoran tells GlobeSt.com "I liked."
Corcoran says the 10-year pact could be just the beginning for the new relationship. "We will look at doing transactions with them, not necessarily a joint venture," he says. Corcoran says this deal had been struck because it proved to be "more efficient than an outright sale" of the holdings.
Interstate, founded in 1961, operates about 140 hotels with more than 28,000 rooms in 38 states. The operation spans more than 25 brands.
With the deal comes a stipulation that Interstate will spend $5 million to $6 million for primarily cosmetic upgrades to the eight properties, says Corcoran. The improvements should get under way in 60 days and wrap up by year's end.
Interstate officially took the reins Jan. 1 at the eight hotels, but the final papers have just been inked. The properties are valued at $77 million and are being managed by Interstate's affiliate, Crossroads Hospitality Management Co.
The joint venture encompasses the Fairfield Inn in Scottsdale-Downtown, AZ.; Courtyard by Marriott and Fairfield Inn, both in Atlanta's downtown; Fairfield Inn in Dallas at Regal Row; Courtyard by Marriott, Fairfield Inn and Hampton Inn, all in Houston.
Under the pact, Interstate is kicking in $8.1 million. The joint venture has closed a $52-million loan, of which some $48 million in cash proceeds go to Felcor. In addition to the half ownership, Felcor will retain a $17-million preferred interest in the joint venture.
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