Fairmont gains
from hotel sale

Kea Lani resort sold

The Fairmont Kea Lani Maui resort in Wailea was sold to Host Marriott Corp., which bought the Hyatt Regency Maui Resort and Spa in Lahaina last year:

Fairmont Kea Lani Maui: 450 suites, 21 acres

Buyer: Host Marriott Corp.

Seller: Fairmont Hotels & Resorts Inc.

Price: $355 million

Host Marriott Corp., the largest hotel real estate investment trust in the country, has agreed to buy the Fairmont Kea Lani Maui resort in Wailea for $355 million as part of its strategy to acquire high-quality resort assets.

Toronto-based Fairmont Hotels & Resorts Inc. will retain its existing long-term management contract for the 450-suite luxury resort, which will not undergo a name change.

Host Marriott has been selling smaller hotels to pay down debt to reinvest in resorts and larger properties in mainland cities and other areas that the company expects to benefit as travel demand increases. Last year Host Marriott bought the Hyatt Regency Maui Resort and Spa in Lahaina.

The company owns 111 upscale and luxury full-service hotel properties that are leased to other companies. Most of the properties are managed under the Marriott and Ritz-Carlton brand names but other names include Hyatt, Four Seasons and Swissotel.

"We are delighted to add this luxury resort located in the exclusive destination of Wailea to our portfolio," said Host Marriott Chief Executive Officer Christopher Nassetta.

"This will be our second acquisition in Hawaii and our first in Wailea, which we believe to be a high-growth market and the top market in Hawaii."

The hotel sits on 21 acres of fee-simple beachfront property and has 413 two-room suites and 37 two- and three-bedroom beachfront villa units with private swimming pools.

The hotel also has more than 11,000 square feet of indoor meeting space and another 20,000 square feet of outdoor function space. The purchase will close in August and will be Host Marriott's first Fairmont-managed property.

Fairmont, which acquired the hotel and management contract in 2001 for $250 million, said it will record a gain of $69 million from the sale.

Fairmont Chief Executive Officer William Fatt said it was "an attractive time" to sell the Maui property. He said the resort had seen solid growth in operating performance since Fairmont took it over, partly due to Fairmont's "strong brand presence" in California and among that state's legions of Hawaii-loving tourists.

"It also reinforces our strategy of acquiring attractive assets, realizing the value created through improved performance and then redeploying the capital to continue growing the company," he added.

Fairmont also said it plans to reinvest a portion of the proceeds in additional hotels over the course of the next year. It will also use some of the proceeds to acquire the remaining interest in the Fairmont management company, to increase its share purchases under its existing share repurchase program and, in the interim, to reduce debt.


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