Apollo Investment Corporation, an affiliate of Leon Black-led Apollo Global Management, has agreed the purchase of 50 percent of Innkeepers USA Trust, a troubled hotels real estate trust which owns more than 70 hotels in the US.
According to a report by Reuters, Apollo is to purchase the stake for $107.5 million from Lehman Brothers Holdings, the hotel company’s secured creditor.
Innkeepers filed for protection earlier this month as part of an agreement with Lehman Brothers subsidiary Lehman ALI which sees the lender forgive $238 million of its debt by switching it into equity. Innkeepers’ total debt obligation is $1.4 billion although under the bankruptcy plan, it hopes to wipe out a large proportion.
The hotels company was originally owned by Apollo however its equity in the business will be wiped out when it emerges from bankruptcy at which point its ownership would transfer to Lehman ALI. Once the transfer is complete, Lehman will sell the 50 percent position to Apollo Investment Corp, an affiliate company of Apollo Global Management, as part of the agreement.
Apollo purchased Innkeepers in 2007 but has already written down the investment by 99 percent, Reuters said.
Inkeepers owns positions in hotels across 19 US states as well as in Washington. The hotels are operated by well-known brands such as Marriott, Hyatt and Hilton. The company is based in Palm Beach and employs more than 2,500 staff.