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Commerical Real Estate

FelCor Suite Agrees to Buy 8 Hotels From Starwood

April 21, 1998|From Bloomberg News

IRVING, Texas — FelCor Suite Hotels Inc. agreed to buy eight hotels from Starwood Hotels & Resorts for $245 million, adding to its stable of Embassy Suites hotels.

Six of the properties will remain or be converted to the Embassy Suites brand, which makes up the majority of FelCor's hotels. The other two will be Sheraton hotels.

Such a large group of Embassy Suites hotels might not be available again to FelCor, which is already the world's largest owner of the brand, said FelCor President and Chief Executive Thomas Corcoran said. Starwood is selling them to raise cash and to focus on its own brands--Sheraton and Westin--that it acquired in the last year.

"We started talking to them a long time ago about buying things that it didn't make sense for them to own," Corcoran said.

The purchase brings FelCor's total portfolio to 84 hotels, including 58 Embassy Suites.

FelCor, an Irving, Texas-based real estate investment trust, is picking up two Embassy Suites hotels in Phoenix and one each in Atlanta, St. Louis and Palm Desert. It is also buying a Dallas Doubletree Guest Suites hotel, which will be converted into an Embassy Suites, and Doubletree hotels in Fort Lauderdale, Fla., and Lexington, Ky., that will be turned into Sheraton Suites hotels.

Embassy Suites and Doubletree are owned by Promus Hotel Corp., which manages most of FelCor's properties and owns 1.2% of its stock.

FelCor said in March that it would buy Bristol Hotel Co.'s hotels for $1.9 billion, expanding the company beyond all-suite hotels and making it the largest owner of Holiday Inn hotels.

Starwood, a Phoenix-based REIT, became one of the world's largest hotel companies last year through a string of purchases, including its $1.57-billion purchase of Westin Hotels and its $14.6-billion acquisition of ITT Corp., owner of the Sheraton hotels.

"Their stock price is depressed, so they needed to raise cash," Deutsche Morgan Grenfell analyst Paul Keung said of Starwood.

Shares of FelCor fell 25 cents to close at $34.63. Starwood, which has dropped 13% so far this year, fell 63 cents to close at $50.44. Both trade on the New York Stock Exchange.

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