CNL Hospitality Closes First Half With Six New Assets Valued at $260M

The five-year-old hotel investment/development arm of the $5.3 billion, 29-year-old CNL Financial Group Inc. of Orlando is starting four or five new development projects a year at average hard costs of $80,000 to $90,000 per unit and average acquisition prices of $33 million per property.

In an industry where some of the players are barely hanging on, CNL Hospitality bought six properties valued at $260 million or an average $43 million per property in the first half.

At that pace, the company will match or surpass its 2001 performance of 13 purchased properties valued at $450 million or about $34 million per deal.

Finding money to do the deals has never been a problem for CNL Hospitality.

"CNL's consistent access to capital, accompanied by the extraordinary efforts of our hospitality team and our success in hotel development, has enabled the company to achieve a significant share of the hotel investment activity in today's U.S. lodging market," Charlie Muller, chief operating office of CNL Hospitality, says in a prepared statement.

In its five-year history, the company has either acquired or has commitments to acquire interests in properties valued at $1.8 billion comprising 54 hotels and 13,240 rooms in 21 states, according to the statement. That averages out to $33.33 million per property.

The newest assets are an interest in the 405-room Courtyard San Francisco Downtown and the 347-room Marriott Bridgewater in New Jersey, both purchased in June from Marriott International Inc. Other acquisitions from Marriott this year a Courtyard hotel, a TownePlace Suites and two SpringHill Suites.

In all, Marriott sold CNL Hospitality eight hotels for about $181 million or an average $22.6 million, according to previous prepared statements from CNL Hospitality. The properties are in California, New Jersey, Pennsylvania and Virginia.

CNL Hospitality launched its development group in 2000. Until then, the company was strictly a buyer. The company plans to break ground shortly on a 156-room Courtyard in Foothill Ranch, CA. The property is scheduled to open in third quarter 2003 at an estimated hard construction cost of $14 million.

Also scheduled to break ground in first quarter 2003 is a nine-story, 300-room Renaissance Hotel at Tampa's International Plaza adjacent to Tampa International Airport. At an average hard cost of $90,000 per room, the project will have an estimated value of $27 million.

Muller understates the company's robust performance when he says in the prepared statement he is "pleased that we were able to achieve our goal of starting four or five new development projects per year, which has positioned CNL to continue maximizing value for our investors and to become more vertically integrated."