MONTEREY, CA–Publicly traded MeriStar Hospitality Corp. of Arlington, VA, has sold the 204-room Hilton Monterey to Valencia, CA-based Ocean Park Hotels for $20.5 million, or $100,000 per key. Ocean Park Hotels says it plans to manage the hotel and invest approximately $5 million in renovations in order to bring it back up to Hilton standards. MeriStar is in the process of shedding $60 million in assets by the end of the third quarter to meet its 2005 earnings guidance. The company plans to use the proceeds of the sale for business purposes including debt reduction and capital expenditures for its existing assets. MeriStar owns 20,115 rooms in 72 hotels in major markets and resort locations. MeriStar chairman/CEO Paul Whetsell could not be reached Monday for comment on the acquisition. In a prepared statement, he says the sale price is 20 times the trailing 12-month EBITDA or, “if you factor in capital spending avoided as a result of the transaction,” the sales multiple is about 25 times. Ocean Park Hotels president James Flagg tells he thinks the company got an excellent deal. “We acquired this asset at below replacement cost despite the fact that you couldn’t replace it even if you wanted to; they have a moratorium,” he says. “It’s a great market, and we have a very different operating model (than Meristar), one that shows there’s a significant return to be made on a $5 million investment.”Ocean Park Hotels owns 10 moderately priced hotels in Southern California, Phoenix and Albuquerque and has several more under development. The company has broken ground for three new hotels and will break ground on four more by the end of the year, Flagg says.The Hilton Monterey is the furthest north the company has ventured in California. Now that the barrier has been broken, Flagg says the company likely will be making more acquisitions in Northern California.About half of the company’s existing properties were acquired and the other half the company developed on its own. About half the portfolio is owned solely by the company and about half is owned with a joint venture partner, either high-net-worth individuals or equity funds. The Monterey Hilton was paid for with a company equity and debt provided by Rockbridge Capital

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