Wyndham Sells Clubhouse Brand

DALLAS? Just another $150 million to go. That?s the value of non-strategic property assets Wyndham International is looking to sell off by the end of the year, following its most recent disposition of 14 such facilities to a joint venture of Regency Hotel Management and Milestone Hotel Investments. Included in the latest transaction? valued by market sources at less than $100 million? were eight Clubhouse Inn hotels and six Wyndham Garden Hotels, plus the rights to the Clubhouse Inn brand. At presstime, executives at Minneapolis-based Milestone and Regency, a subsidiary of Sioux Falls, SD-based Ramkota Cos., were “still studying” how they might proceed in their utilization of the Clubhouse Inn name. Officials did say, however, that an operating affiliate of Regency will continue to manage the newly acquired complement of Wyndham Garden Hotels under a long-term franchise agreement with Wyndham. Additionally, the Regency/Milestone executives indicated they would be looking to renovate the properties, with capital expenditures for this purpose estimated to be in excess of $10 million. Focus On Upscale Segments “This transaction will allow us to focus on our core, upscale and luxury segments while further strengthening our financial position,” said Fred Kleisner, Wyndham?s president/CEO. Sources at the hotel ownership/leasing/management/franchising company here noted that Wyndham has? since its recapitalization 13 months ago? bulked up its finances to the tune of roughly $400 million via the selective sell-off of assets. All told, those same sources indicated Wyndham has something in the neighborhood of a billion dollars in non-strategic assets available for sale, and expectations are such that the company should realize a return of approximately $300 million through the divestiture of non-core properties this year. Similar deals Wyndham has recently entered into include the December 1999 sale of the 11 U.K.-based hotels of Arcadian International Ltd. to Hand Picked Hotels of London for approximately $120 million, and the disposition of its Sierra Suites Hotel brand, properties and related assets to Sierra Suites Hotel Co. in March of this year. Following in what seems to be the operational footsteps of several other hotel companies in today?s marketplace, Wyndham is reportedly utilizing these proceeds primarily to reduce its outstanding debt and improve its overall balance sheet and? to a lesser degree? move forward with other development, investment and franchising opportunities. Additionally, this latest sell-off reaffirms the company?s avowed interest in greater involvement in management and other fee-based contracts, with physical property ownership stepping back in the company?s overall operational scheme. Examining the Clubhouse Inn/Wyndham Garden transaction from the buyers? perspective, David Sweet, Regency Hotel Management president/CEO, acknowledged that this undertaking was merely the latest move in the company?s on-going series of acquisitions over the course of the past several years, a developmental path the firm expects to follow for at least the foreseeable future. “We?re determined to grow our portfolio through buying and/or building, doing whatever makes sense financially and operationally,” Sweet maintained. “And while we do manage many of our 64 properties,” he added, “most of what we?re in we own.” In this most recent instance, Regency and Milestone are involved in the deal as 50/50 equity cash partners, though Regency is the managing partner. Meanwhile, Jasen Mark, Milestone?s vp/acquisitions, pointed out that his firm and Regency have done a lot of business together over the past 13 years. “We?ve purchased 39 hotels, and we?re currently co-owners of 36,” he explained. “We?re long-term buyers and not flippers of properties; we like to own and operate our investments.” Apparently, the Regency/Milestone partnership is not fazed by the thought of paying franchise fees. “As long as it?s the right flag for