Apollo acquires hotel REIT for $700m

The New York-based private equity real estate firm has teamed up with Aimbridge Hospitality and JF Capital Advisors in the acquisition of Eagle Hospitality.

Apollo Real Estate Advisors has agreed to acquire Covington, Kentucky-based hotel REIT Eagle Hospitality Properties in a transaction reportedly valued at $700 million (€540 million), including debt and preferred equity.

Under the terms of the deal, the New York-based private equity real estate firm and its operating partners, hotel management company Aimbridge Hospitality and hospitality advisory firm JF Capital, will acquire Eagle for $13.35 per share, a premium of 42 percent over the company’s share price on January 29, 2007, the day Eagle announced that it was exploring strategic alternatives.

Eagle went public in October 2004 at a share price of $9.75 and currently owns 13 hotels throughout the US, including properties in Arizona, California, Colorado, Florida, New York, Kentucky, Ohio, Illinois, Massachusetts and Puerto Rico. The company is headed by chairman William Butler and chief executive officer Bill Blackham. Butler is also the chairman and CEO of an affiliated company Corporex, which manages nine of Eagle’s hotels. In February, Corporex offered to buy the company, but it met with resistance from certain shareholders over perceived conflicts of interest.

Apollo Real Estate is an affiliate of the private equity firm Apollo Management. Last month, another Apollo affiliate, Apollo Investments, a publicly traded business development company, also made an investment in the hotel sector. The company, which traditionally focuses on mezzanine debt investments in LBO transactions, announced the acquisition of Innkeepers Trust, a hotel REIT, for $1.5 billion. JF Capital served as an advisor to Apollo Investments in that transaction as well.