Shelbourne Acquires 20 Motels in $77M-Deal

The operating partnerships of Shelbourne Properties I, Inc., Shelbourne Properties II, Inc. and Shelbourne Properties III, Inc. have, through a joint venture, acquired a 100% interest in 20 motel properties triple net leased to an affiliate of Accor S.A. The cash purchase price was approximately $2.7 million and the properties are also subject to approximately $74.2 million of existing mortgage indebtedness.

A spokesperson for Shelbourne Properties tells GlobeSt.com that shareholders of the three REITs adopted plans of liquidation this past October which placed restrictions on the minimum amount of assets the REITs could hold. The spokesperson explains that if the REITs were to fall below that asset level it could trigger penalty payments to a "Class A preferred unit holder of each of Shelbourne Properties operating partnerships." This transaction, he points out, eliminates that problem.

In a released statement, the company says that "the acquisition of the Accor properties and the modifications to the terms of the Preferred Units should facilitate the disposition of the other properties of the Shelbourne REITs and the distribution to shareholders of the sales proceeds in accordance with the plans of liquidation of the Shelbourne REITs approved by stockholders in October 2002."

The company adds that the holder of the "Preferred Units" has the right to require the operating partnerships to acquire other properties for its benefit at an aggregate cash cost to the operating partnerships of $2.5 million. If that were to occur, the Accor properties would not be held for the benefit of the holder of the Preferred Units and would be disposed of as part of the liquidation of the Shelbourne REITs.