Lone Star buys US hotel group

Lone Star Funds has agreed to pay $270 million to acquire Lodigan, which owns and operates 34 hotels, in an all-cash transaction.

Though the parties did not reveal which fund Lone Star is investing, PEO's sister web site PERE reported that Lone Star’s 2007 dedicated property vehicle that corralled $2.5 billion of equity is behind it.

The Dallas, Texas-based firm is raising $20 billion for Lone Star Real Estate Fund II and a private equity vehicle, Lone Star VII. The firm is targeting $10 billion for each fund.

Lodigan said in a statement the investment in the deal was $270 million although the price tag also included assumed debt.

Under the terms of the deal, Lone Star will acquire all of the outstanding common stock of Lodgian for $2.50 per share. The price represents a premium of approximately 67.2 percent over Lodgian's average closing share price of one month prior to 15 January, 2010 and 64.3 percent over Lodgian's average closing share price over six monhs.

Sixteen of the assets are InterContinental Hotels Group brands, Crowne Plaza, Holiday Inn, and Holiday Inn Express, twelve are Marriott brands  – Marriott, Courtyard by Marriott, SpringHill Suites by Marriott, Residence Inn by Marriott and Fairfield Inn by Marriott – and two are Hilton brands, while the remaining 4 are affiliated with other franchisors including Starwood, Wyndham and Carlson.