NATIONAL REPORT— In addition to renewed and heightened interest demonstrated of late by public-market investors in hotel REITs, several knowledgeable veterans of the hospitality industry similarly have dived right into the mix via successful initial public offerings this past year. It was late August when Dallas, TX-based Ashford Hospitality Trust— following a four-month incubation period as a blind-pool investment opportunity under the auspices of Archie and Monty Bennett and other Remington Hotel Corp. executives— was officially born into the world via an IPO launch of some 25 million shares priced between $9 to $11 per share. The idea was to raise $322.75 million in net proceeds from the offering, with $65.7 million to be applied toward repaying debt. At the time of its official inception, Ashford listed: four Embassy Suites, with one each located in Dallas and Austin, TX, Las Vegas, NV and at Washington Dulles International Airport in Herndon, VA; and two Radissons, one in Covington, KY and the other at MacArthur Airport in Holtsville, NY. However, this start was shortly followed up by a five-property acquisition from FelCor Lodging Trust, and subsequently a four-facility purchase from Noble Investment Group. Ashford’s unveiling was followed much more recently by one featuring Highland Hospitality Corp., an outgrowth of Barceló Crestline Corp. launched as a self-administered real estate investment trust focused primarily on opportunities in the U.S. within the upscale full-service and premium limited-service and extended-stay lodging segments. In December, the new lodging REIT priced its IPO of 30 million shares of its common stock at $10 per share. Following the offering, Highland’s Chairman Bruce Wardinski and the rest of the McLean, VA-based company’s officers proceeded to make good on their vow that total gross proceeds from the offering and private issuances of about $342.3 million would be slated principally to fund the acquisition of seven initial hotel properties. To this end, Highland quickly acquired a 100% interest in three hotels— two in Virginia, and the other in Texas— for a sum of close to $70.7 million. The three properties include: the 250-room Portsmouth Renaissance Hotel & Conference Center in Portsmouth, VA; the 176-room Virginia Beach Town Center Hilton Garden Inn in Virginia Beach, VA; and the 300-room Sugar Land Marriott Hotel & Conference Center in Sugar Land, TX. On the other side of the coin, there were also two REITs exiting the sector’s ranks. In the case of RFS Hotel Investors, that Memphis, TN-based organization was acquired by Orlando, FL-based CNL Hospitality (an unlisted REIT in its own right). As such, RFS is now due to be officially scrubbed from the industry’s memory banks as of Jan. 31, 2004. Finally, closing out 2003 was a decision by shareholders of Jameson Inns in Atlanta, GA approving the relinquishing of its status as a REIT, while similarly providing a “thumbs up” to the proposed buy of Kitchin Hospitality LLC, the operator of the REIT’s lodging properties. (accompanying chart) Do you expect to see more or fewer companies in the REIT ranks in 2004? More 50.0% Fewer 28.6% Little Change 7.1% No Comment 14.3% *NOTE: All calculations rounded off to nearest tenth of a percentage point & based on data provided by those lodging industry REITs responding to HOTEL BUSINESS® survey.
