DALLAS? Wyndham International is seeking to sell its 11 historic-style Arcadian International Limited hotels in the U.K. so that it can focus its European operations on running the Malmaison brand and the Great Eastern Hotel, which is located in London. The news came just weeks before shareholders were slated to vote on a restructuring plan that would merge Wyndham International and Patriot American Hospitality into a single entity and convert them from a paired-share real estate investment trust (REIT) structure to a C Corporation. On paper, that would make Patriot American, which is a REIT, a subsidiary of Wyndham, which is a C Corporation. The combined company?s new name is to be Wyndham International. News of this restructuring came last March, when it was announced James Carreker would be president/CEO of this single entity. But the move brings not only name changes and tax implications to Wyndham International, it brings together a company infused with $1 billion in funding from Apollo Real Estate Advisors L.P. that will help it dig out from under a huge load of debt it incurred following a hotel buying rampage last year. The company views the shopping around of Arcadian International as a natural extension of its plans to simplify and strengthen its core businesses. ?Arcadian didn?t fit into Wyndham?s core brands, which are Wyndham and Grand Bay,? a company spokesperson said, adding that the company was declining to comment further on the matter. Patriot American bought Arcadian International in 1998 from Robert Breare for $36.1 million in cash plus the assumption of $272.6 million in debt. The deal included the 11 historical Arcadian properties (10 in England and one in Jersey), the Malmaison brand and the Great Eastern Hotel. While Arcadian?s historic properties are on the block, its more contemporary Malmaison brand is not, nor is the Great Eastern Hotel. In fact, Mark Mutkoski, managing director, equity research, Deutsche Banc Alex.Brown, said acquiring the Malmaison properties, which ?are young and fresh and well-received,? are the reason Wyndham bought Arcadian International in the first place.? He didn?t rule out the financial benefits of divesting the historic hotels, however. ?They are looking at any assets that are not going to fit into the core brand,? said Mutkoski, noting that it?s likely the sale of the Arcadian assets will have neutral to favorable tax consequences. ?It?s easy for them to sell from a tax viewpoint, they can pay down debt with the money,? he said. According to Wyndham, the Arcadian properties are located close to major metropolitan areas and near main road and rail networks. The 126-room Great Eastern Hotel in London, which Wyndham owns with Conran Holdings, is scheduled to open within the next few months. The sale of the Arcadian assets may not be the last for sale sign we see on Wyndham holdings. ?We will see a lot of asset sales for Wyndham,? said Mutkoski. ?There will be a lot of hotels they won?t be able to flag, due to long term franchise agreements that will be difficult to break,? he said. With the news of the Arcadian sale, Wyndham announced Robert Breare, who had held the title of CEO of the Arcadian brand, will step down July 9 to become CEO of Ushers of Trowbridge, a brewer with over 800 pubs.
