Equity Inns Enters Boston Market With Two Hotel Buys

Paramount will continue to manage the properties under a three-year agreement that includes property specific performance thresholds. The $74,000 per-room purchase price also includes an additional investment of $1.1 million in refurbishment costs.

"Looking at the Boston market, we see it has been deflated the last couple of years but we see it coming back and we want to take advantage of," Howard Silver, Equity's president and chief executive officer tells GlobeSt.com. He believes the hotels were purchased at "below replacement value in a market that should be getting better."

Silver says the Germantown, TN-based REIT selected the two properties based on its assessment of office space in the Peabody area and the upside of that market. "We weren't specifically looking to Boston, we were looking to diversify and looking at hotels that have good potential," he notes, adding that although the firm has no immediate plans to acquire additional hotels here, Equity is interested in expanding in the area.

The firm's acquisition plans comes on the heels of another acquisition announcement earlier this week when LaSalle Hotel Properties said it had entered into an agreement to buy the Westin Copley Plaza for $318 million. That deal, one of the largest hotel acquisitions in the Boston area, is expected to close by the end of the year.

Sean Smith, a hotel analyst with Stifel Nicolaus & Co., Inc., tells GlobeSt.com that the recent trend in hotel buy-outs is an indication that the hotel submarket is rebounding after years of stagnation caused by tough economic times and terrorism fears from 2000 to 2003. "What you are seeing from 2004 to today is the pace of acquisitions and dispositions picking up a lot," Smith says.

Equity's decision to enter the New England market, he notes, is a significant move for the company, which owns 118 hotels with more than 14,000 rooms in 34 states, primarily in the southeast. "You're starting to see them expand their footprint," Smith says, noting that the firm recently announced it was also looking to the California market for future acquisition opportunities.