CAPSTAR HOTEL COMPANY
Contact: William M. Karnes
Senior Executive Vice President and
Chief Financial Officer
John Emery
Treasurer
(202) 965-4455
FOR IMMEDIATE RELEASE
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Robert Jones/Christine DiSanto/
Jim Cappuccio
Stan Froelich - (financial media)
Morgen-Walke Associates
(212) 850-5600
Jerry Daly or Carol McCune (media)
(609) 383-1414
CAPSTAR HOTEL COMPANY COMPLETES PURCHASE
OF FIVE HOTELS FROM MBL LIFE ASSURANCE CORPORATION
CAPSTAR TO SPEND $3.7 MILLION ON RENOVATING AND REPOSITIONING FOUR PROPERTIES
WASHINGTON, D.C., December 18, 1996--CapStar Hotel Company (NYSE: CHO), a
leading hotel investment and management company, today said it had completed the
previously announced acquisition of five hotels from MBL Life Assurance
Corporation for $68.4 million. The five-hotel transaction, comprising 1,121
rooms, was announced at the time of CapStar's August 23 initial public offering.
The addition of these hotels brings CapStar's total portfolio of
owned properties to 19 with 5,166 rooms.
Four of the five newly purchased hotels have been managed by CapStar
since 1991. Including the Company's owned hotels, CapStar manages 50 hotels with
10,238 rooms.
"We have committed a total of $3.7 million in funds to renovate four
of the five hotels in order to enhance the competitive positions of these
properties in
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their respective markets," stated Paul Whetsell, president and chief executive
officer. "We acquired this portfolio for $61,000 per room, or approximately 60
percent of estimated replacement cost. We continue to aggressively seek other
quality, full-service, first-class properties serving major U.S. business
centers to add to our portfolio." The five hotels in four states are:
1) HILTON HOTEL, SACRAMENTO, CALIF. Built in 1983, the 326-room hotel
is located in suburban Sacramento, near the interchange of I-80 and Rte. 160, in
a well developed area with commercial office space, upscale retail and
residential uses. The hotel features two restaurants, more than 17,000 square
feet of banquet and meeting space, a pool, health and fitness facilities and a
business center.
2) SANTA BARBARA INN, SANTA BARBARA, CALIF. Built in 1959, the 71-
room hotel is located in this popular residential and resort area on the Pacific
Coast highway directly across from the beach. The hotel features the renowned
Citronelle restaurant, two meeting rooms, an outdoor pool and tennis courts. The
Company will spend approximately $500,000 to upgrade the property's restaurant
as well as install new soft goods in all guest rooms and refurbish all guest
bathrooms.
3) HOLIDAY INN, COLORADO SPRINGS, COLO. Built in 1974, the 201- room
hotel is located approximately five miles north of downtown Colorado Springs on
I-25. The hotel features more than 8,700 square feet of banquet and meeting
space, a health club, pool, tennis courts and restaurants. Colorado Springs has
experienced strong economic growth in recent years, which has led to a major
airport expansion program completed in 1995.
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4) THE EMBASSY ROW HOTEL, WASHINGTON, D.C. Built in 1969, the
195-room hotel is located in downtown Washington, D.C. on Massachusetts Ave. The
hotel features more than 7,500 square feet of banquet and meeting space, a
rooftop pool, a health and fitness center, a business center and a restaurant.
CapStar will spend more than $2.0 million on renovations to guest rooms and
public space. In addition, CapStar has signed a franchise agreement to brand the
property a Hilton hotel and has renamed the property the Hilton Embassy Row.
5) HILTON HOTEL & TOWERS, LAFAYETTE, LA. Built in 1981, the 328- room
hotel is centrally located on a major business artery linking downtown Lafayette
with the local airport. The hotel features more than 17,000 square feet of
banquet and meeting space, a pool, an exercise room, business center and
restaurant. Lafayette serves as a major center for offshore oil drilling and
production and has experience strong job growth over the past several years.
"All of the hotels are in strong, growing markets" said David
McCaslin, chief operating officer. "The completion of our planned renovations
should enable us to significantly improve operating performance at these
properties."
In conjunction with the acquisition of the Mutual Benefit portfolio,
CapStar also announced the restructuring on its existing $225 million line of
credit and the creation of a new $50 million Senior Subordinated Credit
Facility. Commenting on these financings, Paul Whetsell stated, "The
modification of the existing credit agreement is designed to increase its
flexibility and to accommodate the new subordinated debt facility. On a combined
basis, the $275 million in debt capacity provided by these two facilities will
enable the Company to continue to aggressively pursue the attractive hotel
acquisition opportunities we see in the market.
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After subtracting the initial debt outstanding at the IPO, plus the debt
associated with the acquisition of the eight hotels purchased since we went
public, approximately $90 million in debt capacity remains available for future
growth."
CapStar owns and manages upscale, full service hotels throughout the
U.S. under such nationally known brands as Hilton, Sheraton, Marriott and
Westin. The Company specializes in repositioning properties using proprietary
strategic plans designed to capitalize on the opportunities presented by each
hotel and local market. CapStar is one of the nation's largest hotel management
companies and currently manages 50 hotels with 10,238 rooms.