COLUMBUS, OHIO — Red Roof Inns, Inc. recapitalized the ownership of its assets with support from hospitality industry partners, completing this recapitalization through the acquisition of 143 Red Roof Inn properties by a joint venture between affiliates of Five Mile Capital Partners and Westmont Hospitality Group. According to Bloomberg, the joint venture acquired $700 million of Red Roof Inns Inc. debt to gain control of the hotels.
The 143 hotels total nearly 17,000 rooms, and this capitalization includes significant funding for renovations. The joint venture has committed more than $70 million for renovating and upgrading the portfolio with the brand’s new design elements. Five Mile Capital has deep hospitality experience, having been involved in Extended Stay America, Innkeepers and CNL Resorts.
“This committed capital provides long-term stability to the company and highlights the fact that Red Roof is an attractive investment with a unique dual concept of an owner-operated, franchise-centered business,” said Andrew Alexander, president, Red Roof Inns, Inc. “Our strong belief in our own product as we build our franchise grants us the ability to maintain high standards in both realms.”
All Red Roof properties involved in the recapitalization have entered into franchise agreements with Red Roof Franchising, LLC and will continue to be managed by RRI West Management, an affiliate of Red Roof Inns.
Red Roof Inns recently completed a similar transaction with Dune Real Estate Partners and Westmont Hospitality Group affiliates, which included the acquisition of 51 Red Roof Inns. This joint venture plans to contribute an additional 20 million dollars for property renovation and upgrades. The Dune Real Estate Funds make opportunistic investments in a broad range of real estate-related assets, portfolios, joint ventures and operating companies worldwide and are highly experienced hospitality investors.
Despite a turbulent economy, the company reports that Red Roof has outperformed both the economy and midscale segment in Revenue Per Available Room (RevPAR) change year-to-date with a strong 7.1 percent increase. In the past quarter, Red Roof has increased RevPAR by 7.3 percent over the prior year, with an increase in both occupancy and ADR. The brand holds a 115 percent RevPAR index against the economy tract scale year-to-date.
— Dan Marcec