Innkeepers, Cerberus reportedly agree on $1 billion

After intensive negotiations, Innkeepers USA Trust’s sale of 64 hotel properties to Cerberus Capital Management and Chatham Lodging Trust has reportedly been agreed upon for US$1 billion.

Reuters reported on Thursday that a source close to the negotiations said the agreement had been reached but that it remained tentative.

This is about US$120 million less than what the parties had initially agreed for the sales price before Cerberus and Chatham nixed the deal in August, citing a “material adverse event” clause. Pre-trial documentation revealed that Cerberus cited the weakening U.S. economy as the determinant of the decision to invoke the clause.

The Innkeepers bankruptcy trial, in which the company is trying to persuade a judge to force the purchase to go through, is scheduled start up on October 20 if an agreement is not cemented between the parties. In the suit, Cerberus and Chatham are alleged by Innkeepers to have terminated the deal as a negotiating tactic for a lower price on the properties. Innkeepers argues that the buyers must finalize the deal as agreed or pay substantial damages. Cerberus said the lawsuit is without basis.