NAV NOT LOOKING SO HOT

OEH sold the Windsor Court Hotel in New Orleans for a whopping 50x 2008 EBITDA. Not so good on a NAV basis of only $137k per key.

 

 

The Windsor Court Hotel in New Orleans was finally sold.  The asset had been available for sale since 2006.  OEH sold the hotel to The Berger Company for 15x 2007 EBITDA and over 50x 2008 EBITDA.  The valuation may look high but on a net asset valuation it was only $137,422 per key. 

 

The sale probably makes sense as the asset is likely permanently impaired from its peak, pre-Katrina EBITDA estimated at $7MM in 2004 and $6.5MM (including business interruption insurance) in 2005.  Moreover, the sale was part of OEH's delevering strategy.  The degradation of EBITDA to less than $1MM, triggered a violation of the leverage covenant in the Windsor Court's $47.5MM mortgage.  The renegotiated agreement required rapid amortization of the mortgage; $9MM immediately, $7.5MM due 10/5/2009, and $7.5MM annually thereafter). At the time of the sale, the property had $37MM of debt.  

 

The low per key value is consistent with what we've seen in the transactions markets.  Surprisingly, the $137k NAV for the Windsor Court is actually below the $150k average transaction value seen over the past 12 months. The following table lists the hotel deals over the last 12 months.

 

NAV NOT LOOKING SO HOT - hotel comps


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