Host Marriott Corporation announces two strategic asset sales
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Host Marriott Corporation announces two strategic asset sales
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Category: North America & West Indies / Carribean islands -
This is a press release selected by our editorial committee and published online for free on 2006-02-17
Host Marriott Corporation (NYSE:HMT) today announced
that in two separate transactions it has sold the Fort Lauderdale Marina Marriott hotel (“Fort
Lauderdale Marina”) and that it has reached a definitive agreement to sell the Swissôtel The Drake,
New York (“The Drake”). The total gross sale proceeds from both transactions are expected to
approximate $586 million. The sale of the Fort Lauderdale Marina closed on January 27, 2006 and
the sale of The Drake is subject to customary closing conditions and is expected to close in March.
The proceeds are expected to be used to partially fund the Company’s pending purchase of a
portfolio of 38 hotels from Starwood Hotels & Resorts Worldwide, Inc.
The 579-room Fort Lauderdale Marina is a 25-year-old property that consists of a 273-room
main tower and two low-rise wings. The hotel sustained significant property damage and business
interruption from Hurricane Wilma, and currently is operating without the use of its main tower.
Host expects to receive future insurance proceeds associated with these events, which could be
meaningful, and will retain those proceeds under the terms of the sale of the hotel.
The Drake is a 495-room hotel located on the corner of Park Avenue and 56th Street in
Manhattan that originally opened in 1927. Also conveying with the sale of the property are a small,
adjacent building and certain other related assets.
Christopher J. Nassetta, president and chief executive officer, noted, “We are thrilled to
announce the sales of the Fort Lauderdale Marina Marriott and The Drake New York. These
strategic sales are indicative of the strategy we have articulated of capitalizing on value
enhancement opportunities inherent in our world-class portfolio of real estate. The execution of
these transactions also represents the first of our planned steps to finance the cash portion of our
pending acquisition from Starwood.”
The hotels’ combined Earnings before Interest Expense, Taxes, Depreciation and
Amortization (EBITDA) was forecast to be approximately $23 million for full year 2005, prior to
the effect of Hurricane Wilma on the earnings of the Fort Lauderdale Marina (EBITDA equals
combined GAAP operating profit of approximately $14 million plus combined depreciation expense
of approximately $9 million). These sales will be incorporated into the Company’s updated 2006
guidance that will be released in conjunction with the release of its 2005 earnings on February 23,
2006.
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