Thayer JV to buy listed-hotel investor

Thayer Lodging Group is to acquire the listed hospitality investment firm Interstate Hotels & Resorts in a $307 million joint venture deal.

The Annapolis, Maryland-based firm will join forces with Shanghai Jin Jiang International Hotels Company on the 50-50 all-equity transaction. Thayer is investing an undisclosed equity sum through a parallel fund to its fifth hospitality vehicle, Thayer Hotel Investors V-A.

Earlier this month, Thayer closed Thayer Hotel Investors V and the parallel vehicle on $280 million of commitments, with 70 percent of investors re-upping from previous funds.

Leland Pillsbury, Thayer's co-chairman and chief executive officer, said at the time with hospitality revenue per available room (RevPAR) “dramatically impacted” by the downturn, the “next few years will present the best hotel investment opportunity in a generation”.

The deal will see Thayer and Shanghai Jin Jiang, a subsidiary of China’s largest hotel group, Jin Jiang International Holdings Company, acquire Interstate’s outstanding common stock and operating partnership units for $2.25 a share. Interstate's share price at press time was $2.21, up from lows of $0.18 in March.

Thayer and Shanghai Jin Jiang will pay down debt on Interstate’s senior credit facility and on one of the firm’s non-recourse mortgages as part of a lenders’ agreement, the statement added. The deal is expected to close in the first quarter of 2010, pending shareholder approval.

Interstate manages 232 properties in 37 US states, as well as in Russia, India, Mexico, Belgium, Canada, Ireland and England. The firm has ownership stakes in 56 of those properties, owns six hotels and is in contract to manage 13 hotels in development, including one in Costa Rica.

At the time of the Fund V closing, Thayer’s chief operating officer Bruce Wiles said the firm didn’t expect any meaningful recovery in the hospitality sector until 2011, but believed the acquisition market would “accelerate substantially” in 2010.