Arlington, VA, August 20-- Interstate Hotels & Resorts (NYSE: IHR), the nation’s largest independent hotel management company, has signed an agreement to manage 54 hotels currently owned by affiliates of Sunstone Hotel Investors, LLC, a privately held hotel ownership group based in San Clemente, Calif.
The current Sunstone hotel management team will transfer to Interstate, but will remain at their existing offices and will continue to oversee management of the hotels. No changes are planned at the property level, and the transition will be essentially transparent to current Sunstone hotel employees.
The transaction will close, and is contingent on, the concurrent completion of an IPO by Sunstone Hotel Investors, Inc., which is currently in registration with the Securities and Exchange Commission. Sunstone Hotel Investors will be a publicly traded real estate investment trust (REIT), which requires that its owned properties be managed by third party operators.
Concurrent with the IPO, Interstate will enter into new long-term management contracts, which include both base and incentive management fees, as well as certain termination rights, with the hotels.
“Sunstone’s hotels match up well with our current portfolio,” said Steve Jorns, Interstate’s chief executive officer. “Most of the hotels are located in the western half of the country in markets where we currently do not have a significant presence. This transaction will give us added economies of scale in those markets, as well as a highly experienced operating infrastructure in place.”
The 54 hotels, with 12,643 rooms and located in 16 states, are primarily premium-branded full-service properties. The hotels include: 24 Marriott-branded hotels, 16 Intercontinental-branded hotels, eight Hilton-branded hotels and three independent hotels. When combined with Interstate’s current managed hotel portfolio, Interstate will operate approximately 320 hotels.
Interstate Hotels & Resorts operates approximately 270 hospitality properties with more than 60,000 rooms in 40 states, the District of Columbia, Canada, Russia, and Portugal.
