CIGNA Affiliate and Interstate Sell Sawgrass Marriott
ARLINGTON, VA, July 7, 2006. Interstate Hotels & Resorts today announced that the Sawgrass Marriott Resort & Spa, which was owned by Interstate and an affiliate of CIGNA Investments, Inc. has been sold into a new joint venture comprised of affiliates of Redquartz Boundary Ltd. (RQB), an Irish-based investment company, and its investment partners and Interstate, which will retain a minority ownership interest. Interstate received proceeds of approximately $15.5 million upon the sale of the asset and immediately reinvested $7.0 million for its new minority interest. An additional $2.3 million will be contributed by Interstate for its share of equity for renovations and working capital, bringing the company's total investment to $9.3 million. In addition, Interstate will continue to operate the resort under a long-term management contract.
"This acquisition clearly illustrates the benefits of our strategy of co-investing in hotels with select owners as a way to diversify our earnings base," said Thomas F. Hewitt, Interstate chief executive officer. "In addition to participating in the appreciation of the real estate upon the sale, we were also able to secure a new minority investment position and a long-term management contract on this extraordinary property. This is a 'win-win' situation for both the majority owner and Interstate, as we more closely align our interests. This is our first venture with RQB, and we look forward to expanding our relationship with them."
The hotel will undergo a renovation that will completely make over the 508 rooms and suites in the hotel's tower. The $11.0 million refurbishment is expected to commence in the fall of 2006 and be completed in early 2007.
The PGA-owned TPC golf course adjacent to the resort currently is closed and being totally revamped, including construction of a new clubhouse. Sawgrass guests enjoy playing privileges at the world-class course under a long-term contractual agreement between the resort and the PGA. The refurbished course is expected to open in time for the Players Championship Tournament in May 2007.
"This is a great resort with a world-class reputation that has undergone a number of upgrades recently, including a significant expansion of the meeting space to a total of 56,000 square feet and the opening of the 20,000-square foot spa and salon," said Leslie Ng, Interstate's chief investment officer. "With the completion of the golf course and tower renovation next year, the property will have significant upside opportunities."
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