Five Mile Capital Partners and Westmont Hospitality Group gained control of 143 properties from Red Roof Inns Inc. on Wednesday by acquiring US$700 million in mortgage debt.
Red Roof Inn Inc. will continue to manage the hotels via its affiliate RRI West Management through a franchise agreement. As part of the deal, US$70 million will be committed to revitalizing the properties.
The economy-level Red Roof Inn hotels involved in the purchase, totaling 17,000 rooms, are located in the U.S. and represent nearly half of the Red Roof Inn, Inc. portfolio that includes corporate-owned and franchised hotels.
The deal will help recapitalize Red Roof Inns Inc. after the company defaulted on US$754 million in mortgage loans on 127 properties in 2009. Red Roof Inns Inc. also recently sold 51 properties to Dune Real Estate partners and Westmont.
“Now that the recapitalization is complete, the investments from both the Five Mile and Dune ventures position the brand well for long-term health and profitability,” said Andrew Alexander, Red Roof Inns Inc. president.
