Fairmont reaps windfall from sale of Orchid on Big Island
The Fairmont Orchid hotel on the Big Island is getting a new owner, but no operational changes, as a result of a real estate transaction that is netting Fairmont Hotels & Resorts Inc. a $109 million profit.
The chain announced yesterday that it has sold the Kohala property to Westbrook Partners LLC for $250 million to raise money to buy other assets.
Fairmont, which bought the hotel for $140 million three years ago, will continue to manage the property.
Wendy Bagwill, public relations director for the hotel, said the new owner will complete renovations begun by Fairmont and that operations will continue with no changes.
The buyer, Westbrook Partners, is a real estate investment management company with offices in New York, San Francisco, London, Paris and Tokyo.
Fairmont said that the sale of the Orchid, a 32-acre resort with 540 rooms on the Kohala Coast, "supports our strategy of acquiring attractive assets, realizing the value created through improved performance then redeploying the capital."
Citigroup Global Markets Inc. valued the Orchid hotel at $216 million in a Dec. 7 note to clients.
Fairmont, the owner of 88 luxury hotels, is fending off a takeover by billionaire Carl Icahn. On Thursday the chain urged investors to reject Icahn's $1.19 billion bid for about 41 percent of its shares, saying the company may find other buyers.
Icahn's unsolicited bid of $40 a share is "inadequate" and not in the best interest of investors, Fairmont said. The company, owner of the Savoy in London, is reviewing "alternatives" that may lead to a sale.
Fairmont shares rose 53 cents, or 1.3 percent, to $41.58 yesterday on the New York Stock Exchange.
"I don't see the incentive to tender our shares," said Greg Eckel, who owns 175,000 Fairmont shares among the $860 million he helps manage at Morgan Meighen & Associates in Toronto. "We expect more, and hopefully we'll see more. There may be some players we're not aware of yet."
Fairmont spokesman Dan Gagnier declined to name possible bidders or say how many are in talks with the hotel operator, which also owns the Banff Springs Hotel in Banff, Alberta, the Royal York in Toronto and Chateau Frontenac in Quebec City.