Innkeepers USA Buyout Doomed, Analysts Estimate
Add one more bruise to the growing list of battered Apollo management investments. Analysts at Stifel Nicolaus believe Inkeepers USA, a hotel REIT investment made by the firm's publicly traded BDC, is heading for default in '09. For background, Apollo Investments is a BDC traded on NASDAQ under the ticker AINV. It makes equity, debt and senior secured loan investments across a variety of sectors and has a $1.34 billion market cap. You may remember the fund's CEO, John Hannan, resigned in November; he's been replaced by COO James Zelter. The fund took Innkeepers USA Trust private in April 2007 for $1.5 billion. According to the analyst report, the deal brought Innkeepers from 4x leverage to an estimated 10x proforma expected 2008 EBITDA (page nine has a nice before and after cap structure chart). The report states that the investment is "significantly underperforming," and likely to see a rocky '09.
