Louisville Real Estate News

New York investment firm buying Seelbach Hotel’s owner
John R. Karman III
Business First Staff Writer

A blockbuster transaction in the lodging industry will mean new ownership at Louisville’s historic Seelbach Hilton Hotel.

The 101-year-old downtown landmark is among 57 upscale hotels being acquired by an affiliate of The Blackstone Group LP in its planned purchase of MeriStar Hospitality Corp. MeriStar currently owns the Seelbach.

New York City-based Blackstone is a private investment and advisory firm. MeriStar is a Bethesda, Md.-based hotel real estate investment trust, which owns properties under brands such as Hilton, Marriott and Sheraton. The $2.6 billion transaction, announced Feb. 21, is expected to close in the second quarter, pending approval by MeriStar stockholders.

Under terms of the deal, Blackstone will pay $10.45 cash for each MeriStar share. MeriStar stock trades on the New York Stock Exchange under the ticker symbol MHX. It closed at $9.93 per share on Feb. 21.

Jon McFarland, the newly named general manager of the 321-room Seelbach, said his company, Arlington, Va.-based Interstate Hotels & Resorts Inc., will continue to operate the hotel.

He said he is hopeful that Blackstone will “infuse new capital” into the hotel, allowing for upgrades. “I see it as a huge opportunity that could benefit the Seelbach,” he said.

Representatives of MeriStar could not be reached for comment prior to Business First’s press deadline. Blackstone officials declined to comment on the deal.

The transaction is the latest in a string of hotel acquisitions for the New York City firm. Last summer, Blackstone agreed to acquire Wyndham International Inc. for $1.44 billion. In November, the firm bought hotel chain La Quinta Properties Inc. for $2.28 billion.

Earlier this month, it also agreed to buy 10 Florida properties from MeriStar for about $367 million in cash.

MeriStar has owned the Seelbach since August 1998, when the REIT was formed with the merger of American General Hospitality Corp., a hotel real estate investment trust, and CapStar Hotel Co., a hotel ownership and management firm.

CapStar purchased the Seelbach and five other hotel properties from New York City-based Medallion Hotels Inc. for $150 million in January 1998.

In May 2001, FelCor Lodging Trust Inc., an Irving, Texas-based REIT, struck a deal to buy MeriStar for $2.7 billion. That deal fell apart in September 2001, following the Sept. 11 terrorist attacks on the United States.