SPOKANE, Washington—Red Lion Hotels Corporation’s buyout of 10 hotels formerly leased from a subsidiary of iStar Financial will allow the hotel company to clean up its portfolio in an “appropriate way,” president and CEO Jon E. Eliassen said Thursday during a third-quarter earnings call.
Red Lion paid US$37 million for the hotels. The buyout was announced Thursday. The purchase price was funded with cash proceeds received from the sale of the Red Lion Hotel on Fifth Avenue in Seattle, US$32 million of which was paid through a tax deferred exchange.
Red Lion will continue to lease the Red Lion Hotel Vancouver at the Quay in Washington from iStar.
The lease for the 10 hotels originally was entered into in 1995 under the company’s previous owners.
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The company plans to immediately sell three of the 10 purchased hotels, Eliassen added, though he declined to specify which assets will be sold.
“In those cases it’s basically about eliminating lower performing properties or properties that just aren’t going to be adequate for the brand standard long term,” Eliassen said.
In addition to the three former iStar-leased properties, Red Lion is also offering its Helena, Montana, property for sale. The company will also evaluate relisting the Red Lion Denver Southeast.
Still, Eliassen maintained a company goal is to “continue to own and manage as well as franchise hotels in core western markets.”
The hotels purchased in the iStar transaction include: Red Lion Hotel Boise (Idaho) Downtowner, Red Lion Inn Missoula (Montana), Red Lion Inn Bend (Oregon); Red Lion Hotel Coos Bay (Oregon), Red Lion Hotel Eugene (Oregon), Red Lion Hotel Medford (Oregon), Red Lion Hotel Pendleton (Oregon), Red Lion Hotel Kelso/Longview (Washington), Red Lion Hotel Wenatchee (Washington) and Red Lion Hotel Sacramento (California) at Arden Village.
As of 30 September, the company had 44 hotels located in eight states and Canada.