USA. MHI Hospitality to purchase Louisville Ramada Riverfront Inn

Sunday, 09 July 2006

MHI Hospitality Corporation (AMEX:MDH) announced today that it has entered into a definitive agreement to purchase the 186-room Louisville Ramada Riverfront Inn, located in Jeffersonville, Indiana for $7.6 million, or approximately $41,000 per unit. The hotel is located directly on the Ohio River, with unimpeded views of the Louisville skyline, and easy access to the center of downtown Louisville.

The purchase price represents a 9% capitalization rate and includes an attached commercial building with two restaurants that contributed over $300,000 to the hotel's 2005 net operating income. MHI intends to extensively renovate and rebrand the asset, as is consistent with the company's repositioning strategy. To facilitate the closing of the acquisition, which is expected in the late third quarter subject to customary closing conditions, MHI may access funds from either its line of credit or a 1031 like-kind exchange, or a combination of the two.

The company will commence with the capital improvements upon closing and anticipates the major physical renovations will be completed within approximately 12 months, during which time the property will remain open. Andrew M. Sims, the president and CEO of the company stated, "We are pleased to acquire the Ramada Riverfront at an attractive price and, once our renovations are completed, we are confident that this repositioned asset will be highly competitive with other upscale properties in the downtown Louisville market. Our estimated basis will be approximately $80,000 per key upon stabilization, which we feel is compelling for waterfront property in this market and well below replacement cost or the cost of new construction."

Last Updated ( Sunday, 09 July 2006 )