Hilton Asset Disposition Program Continues on Schedule; Sells 9 Hotels from August 2005 - March 2006 for $828 Million; Focus Shifts to International Assets
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Hilton Asset Disposition Program Continues on Schedule; Sells 9 Hotels from August 2005 - March 2006 for $828 Million; Focus Shifts to International Assets
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Category: Worldwide
This is a press release selected by our editorial committee and published online for free on 2006-04-18
The asset disposition strategy announced by Hilton Hotels Corporation (NYSE:HLT) in late 2004 continues to be executed successfully. Since last summarizing asset sales (July 2005), the company has sold an additional nine properties between August 2005 and March 2006 for a combined $828 million. Net proceeds after property level debt repayments, transaction costs and income taxes, totaled approximately $670 million.
All nine hotels -- located in Boston, Southfield (Michigan), Portland (Oregon), San Diego, Dallas-Ft. Worth, Anchorage, Phoenix, Minneapolis and Chicago's Palmer House -- remain in the Hilton system either through long-term franchise or management agreements.
On a combined basis and based on trailing 12-month earnings before interest, taxes, depreciation and amortization (EBITDA) (net of fees), the nine hotels sold at an EBITDA multiple of 13.0 times. Including capital that the respective buyers committed to investing in the properties, the trailing 12-month EBITDA multiple was 14.9 times. After adjusting for a normal replacement for furniture, fixtures and equipment, the implied capitalization rate on the sales was 6.1 percent, and 5.3 percent when adjusted for the additional reinvestment capital. The combined per-room sales price was approximately $144,000.
"Along with adding units to our worldwide system through management and franchise contracts, where we have the industry's strongest development pipeline, selling selected hotel assets at attractive prices and retaining them in the Hilton Family of Brands is an important part of our strategy of becoming a more fee-driven company," said Robert M. La Forgia, Hilton executive vice president and chief financial officer. "The market for selling good hotel real estate continues to be very favorable, as evidenced by the attractive EBITDA multiples we've achieved. We are also very excited that the buyers -- all of whom are well respected hotel owners -- have committed to improving these properties, and we look forward to working closely with them."
La Forgia added, "With our domestic asset sales program virtually complete, and following the recent completion of our acquisition of the lodging assets of Hilton Group, we are focused on the disposition of certain international hotel properties."
Hilton Hotels Corporation (NYSE:HLT) is the leading global hospitality company, with nearly 2,800 hotels and 475,000 rooms in more than 80 countries, including 150,000 team members worldwide.
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