Tag Archives: asset

Hyatt Ups Asset-Light Method, Starts Efforts to Sell $1.5 Billion in Hotel Characteristics

Sale of 2 Phoenix Residence Continues Effort To Lighten Possession Load in Favor of Charge Earnings

Having actually satisfied its goal of ending up being a net seller of hotel properties in 2017, Hyatt Hotels Corp. (NYSE: H) has chosen to extend that technique for another three years. The worldwide hotelier means to get rid of at least $1.5 billion of residential or commercial properties because time, and simply this month finished the first sales towards that objective.

“With the current sale of two hotels and the completion of nearly $250 countless share repurchases in the 3rd quarter, we are fulfilling our dedication to be a net seller of properties in 2017 and return significant capital to shareholders,” stated Mark S. Hoplamazian, president and CEO of Hyatt. “Looking ahead, we plan to extend this technique to sell approximately $1.5 billion of property over the next three years, which we are positive will unlock extra shareholder value and drive the development of our organisation.”

This month, Hyatt sold 2 of its Phoenix-area hotels to Orlando-based REIT Xenia Hotels & & Resorts for $305 million, or about $498,000 per room.

The 2 homes, totaling 612 space overs 704,004 square feet, were the Hyatt Regency Scottsdale Resort & & Health Spa at 7500 E. Doubletree Ranch Rd. in Scottsdale and the Royal Palms Resort & & Medical Spa at 5200 E. Camelback Rd. in Phoenix. [For more information, please describe CoStar COMPS # 4020535.]

“Our recent sale of the Hyatt Regency Scottsdale and Royal Palms Hotels is our primary step towards our staged disposition effort and we expect to be very active on this front in 2018,” Hoplamazian added.

The business did not recognize the particular properties marked for personality but noted that owned real estate is broadly being valued by financiers at EBITDA multiples in the high-single to low double-digit range which, in the company’s view, does not relatively reflect the marketplace worth of its portfolio based upon exactly what it has actually had the ability to attain in sales.

“The recent sales of the Hyatt Regency Scottsdale and Royal Palms for gross cash profits of $305 million was our first step in this sell down,” said Patrick Grismer, CFO of Hyatt Hotels. “We sold those properties at a combined numerous EBITDA multiple of 12.6, so that deal compared with how financiers are valuing our overall owned and rented EBITDA stream today, was sturdily accretive, and I think is a good example of the types of transactions we want as we march down this path.”

“We believe this possession personality program will unlock shareholder value, first by monetizing lower yield higher multiple possessions, whose cash flows are not relatively valued by investors. Second, by supplying substantial funds for future growth financial investments and return of capital to shareholders. And third by speeding up the advancement of Hyatt’s revenues profile to more fee-based incomes,” Hoplamazian said.

Previously this year in the United States, Hyatt offered its Hyatt Regency Louisville (KY) for $65 million, which led to a pre-tax gain of $35 million.

CLEANING HOME: Asset Sales Spotlight New Chapter For Sam Zell-Led Equity Commonwealth

Major Personalities Consist of 1.25-Million-SF New Orleans Tower to Hertz Investment Group in Six-Pack of Office Properties

Sam Zell, left, and David Helfand seek to turn around Equity Commonwealth Real Estate Trust after a shareholder revolt led to the ouster of the former board and management.
Sam Zell, left, and David Helfand look for to reverse Equity Commonwealth Realty Trust after a shareholder revolt led to the ouster of the former board and management.

Activist investors in the company previously referred to as Commonwealth REIT had business and profile house-cleaning in mind last year when they did the unheard of in REIT circles and brought in a brand-new board of trustees and a management group led by distinguished real estate investor Sam Zell and his long time deputy David Helfand.

Shareholders were hoping for a few of the legendary market timing that made Zell a billionaire investor and CRE market legend, and the duo immediately set to deal with a business reorganization and possession disposition strategy. They altered the company’s name to Equity Commonwealth Real Estate Trust (NYSE: EQC) and moved its headquarters from Newton, MA, to Chicago.

In February, Zell and Helfand, who functions as the repositioned company’s CEO, unveiled a strategy to sell a $2 billion to $3 billion chunk of EQC’s vast portfolio of mainly suburban workplace assets and a few scattered commercial equipments.

The liquidation plan is proceeding ahead of schedule, inning accordance with Wall Street experts, as Equity Commonwealth ramps up building sales. In current days the Chicago-based company has sold two profiles totaling 51 buildings and 8.3 million square feet in 18 states for a combined prices of $793 million, making up the bulk of the REIT’s $817 million in sales of 56 possessions so far this year. The top reward appears to be the $417.5 million sale of 6 office buildings in 4 southeast U.S. markets to Santa Monica, CA-based Hertz Investment Group. Profits from the sale to Hertz, subtracting home loan financial obligation repayments and lease credits, totaled $320 million.

Equity Commonwealth sold a 45-property portfolio of smaller office and commercial possessions totaling 5.3 million square feet across 19 markets in 13 states to a fund managed by Dallas-based personal equity financier John Grayken for $376 million. The portfolio was 77.5 % rented since the end of the very first quarter. (Please see CoStar COMPs # 3310525 for more details on the transaction).

The 6 workplace structures offered to Hertz Investment total more than 3 million square feet and include One Shell Square, the tallest structure in Louisiana, a 51-story, 1.26-million-square-foot workplace tower at 701 Poydras St. in New Orleans’ CBD (Please see CoStar COMPs # 3314730 to learn more on the deal).

Equity Commonwealth said it currently has three extra office buildings under written agreement for about $35 million totaling 270,000 square feet, and 32 buildings comprising 10 million square feet in various phases of marketing for sale.

“Generally, we see this development on possession sales as beneficial,” JMP Securities analyst Mitch Germain said this week in an investor note, including that pricing is clearly going beyond expectations considered that the culled buildings were occupancy challenged and most likely saddled with deferred upkeep as the business decreases its exposures to several suburban and tertiary markets.

Germain stated EQC’s share evaluations have yet to factor in the brand-new disposition and debt reduction strategy, which he said will make it possible for the company to stockpile cash for future office purchases.

“Further, we believe the share price has supplied no acknowledgment of change in management to an internalized team led by Sam Zell,” Germain added.

The acquisition from Equity Commonwealth marks Hertz’s entry into three brand-new markets: Birmingham, AL, Columbia, SC and Greensboro, NC.

One Shell Square is 93.5 % leased, with significant renters Shell Oil, Adams and Reese, LLP, and Liskow & & Lewis. As part of the offer, Hertz likewise obtained:

Wells Fargo Tower, 30 stories, 514,893 square feet, Birmingham CBD.

Inverness Central, a four-building complex with 475,895 square feet, suburban Birmingham

Meridian, 17 stories, 334,075 square feet, Columbia

300 N. Greene Street, 21 stories, 324,075 square feet, Greensboro

20th Place South, 4 stories, 125,722 square feet, suburban Birmingham.

The 45 smaller sized office and industrial properties are spread across markets in Colorado, Connecticut, Florida, Illinois, Kansas, Massachusetts, Maryland, Minnesota, New Jersey, Missouri, Ohio, Pennsylvania and Virginia.