New York-based private equity firm Cerberus Capital Management and Chatham Lodging Trust have terminated their $1.1 billion agreement to acquire stakes in 64 hotels owned by Innkeepers USA Trust.
According to an announcement from the Palm Beach, Florida-based hotel REIT, the agreement made on 16 May was terminated on Friday, citing “an adverse effect on the business”. Cerberus and Chatham declined to comment beyond confirming what was stated in the announcement. Innkeepers did not return calls for comment by press time.
As PERE previously reported, Cerberus teamed up with Chatham earlier this year to bid on the Innkeepers portfolio, pledging $400 million in equity and assuming $700 million in debt. Chatham's separate purchase of five Innkeepers hotels, which closed on 14 July, has not been affected by the terminated agreement.
A report from Bloomberg has noted that the ending of the agreement disrupts Innkeepers’ exit from Chapter 11 after a judge previously signed off on a plan that has creditors’ approval. Innkeepers and 91 of its subsidiaries opted to file for Chapter 11 bankruptcy protection in July 2010 due to its substantial debt load, reported to be $1.4 billion at the time, which hindered its ability to maintain and upgrade properties.
Innkeepers previously was acquired in 2007 for $1.5 billion by Apollo Investment, the publicly traded business development company and an affiliate of private equity firm Apollo Global Management. The company is a REIT that owns interests in 73 hotels with approximately 10,000 rooms in 19 US states.