JV Agrees to Buy Eagle Hospitality for $680M

Raymond Martz, CFO for Eagle, tells GlobeSt.com that the JV will pay about $315 million for the 23.6 million shares, and will also take over about $265 million in debt. Eagle had been shopping for a buyer since January, he says. Since then, the company's stock price has risen about 40%, and the selling price was a premium over analysts' expectations of $10.50 to $11.50 per share. "We just figured, do you maximize value today by adding value and keeping an investment strategy in place, or selling?" Martz says.

The sale was just a matter of the intense private interest in public real estate companies, Martz says. "There's just a lot of capital, on both the private and public side, and there's a lot of private equity available with a lot of cheap debt," he says. "The combination of the two allow private equity to pay a lot more for a company."

He says the deal should close in the third quarter, provided the stockholders approve and the SEC requirements can be met, and brands such as Hilton, Marriott and Hyatt can refranchise with the JV. Nationally, the deal includes 3,516 rooms in Arizona, California, Colorado, Florida, New York, Kentucky, Ohio, Illinois and Massachusetts. Eagle's stock price as of noon Monday was $13.24 per share. Morgan Stanley is serving as financial advisor to Eagle.

Officials with the JV could not be reached for comment. Lee Neibart, senior partner at Apollo, said in a statement that "the Eagle portfolio consists of a diversified group of well-branded hotels with a strong cash flow." Apollo is continuing its acquisition tear, having just reached an agreement two weeks ago to buy hotel REIT Innkeepers USA Trust for about $1.5 billion.