US: Flynn Properties Inc. has announced an 80 per cent joint venture with Värde Partners for 89 select service and extended stay hotels.
The owner of commercial real estate, luxury resorts and select service hotel properties teamed up with global alternative investment firm, Värde Partners, and announced the acquisition of the 80 per cent joint venture in a US$1.1 billion implied total enterprise value transaction, from affiliates of Highgate and Cerberus Capital Management, L.P.
The portfolio of extended stay and select service hotels comprises 58 Marriott-branded hotels, 24 Hilton-branded hotels, four Radisson-branded hotels, two IHG-branded hotels and one Choice-branded hotel, which will undergo capital improvements over time.
The acquisition will bring Flynn Properties’ limited service hotel portfolio to 115 properties.
Affiliates of Highgate and Cerberus will retain a 20 per cent interest in the investment, and Highgate will continue to manage the properties on behalf of the joint venture.
This is the second joint venture between Flynn Properties and Värde Partners; last year the partners acquired a portfolio of 20 Marriott- and Hilton-branded select service hotels from Apple Hospitality.
Greg Flynn, founder, chairman and chief executive officer of Flynn Properties said: “We are excited to announce the addition of these hotels to our portfolio. This acquisition is part of a broader business strategy of Flynn Properties to increase its limited service hotel footprint, which has proved to be one of the best performing sectors in the industry. We are also excited by the calibre of properties included in this deal, as the portfolio’s brands are global hospitality icons known for hosting some of the world’s most loyal travellers for business and leisure while offering exceedingly robust guest loyalty programs, which we believe will be a key source of guest revenue and retention. Flynn Properties and Värde Partners are thrilled to execute this transaction with Highgate and Cerberus, and to work going forward with the many important franchisors and associates across the portfolio.”
Tim Mooney, global head of real estate at Värde Partners Deutsche Bank Securities Inc. served as financial advisor to Flynn Properties and Värde Partners on this transaction. Mooney said: “The hotel sector continues to strengthen amidst a complex macro backdrop, demonstrating its ability to offer investors the potential for growing, inflation-protected cashflows. These properties recovered quickly from the pandemic and have been performing well, indicative of the quality of their brands and the continued demand for limited service and extended stay hotels. As this cycle continues to evolve, we believe there will be further opportunities to invest selectively in high-quality assets that are well positioned to capitalise on the robust demand for business and leisure travel. We are pleased to partner for the second time with Flynn Properties to acquire this interest in another portfolio of properties in attractive locations with compelling market supply/demand dynamics.”
Flynn Properties is a division of San Francisco-based Flynn Holdings, which has two principal businesses: real estate and restaurants. Prior hotel investments include numerous limited service and extended stay hotels as well as five luxury resorts.
