Marriott Acquires Gaylord Entertainment's Gaylord Brand

Marriott Acquires Gaylord Entertainment's Gaylord Brand

» Featured Columnists | By Scott Kauffman | June 5, 2012 9:00 AM ET

Gaylord Entertainment Co. (NYSE: GET), of Nashville, Tenn., announced May 31 it agreed to sell the Gaylord Hotels brand and the rights to manage its four hotels to Marriott International, Inc. (NYSE: MAR) for $210 million in cash. After the deal closes, Gaylord will continue to own its hotel properties and other businesses and will reorganize and structure itself as a real estate investment trust (REIT) effective January 1, 2013.

When that happens, the company will be the only lodging REIT focused primarily on group-oriented destination hotels in urban and resort markets.

Gaylord's four properties to be managed by Marriott are: Gaylord Opryland Resort and Convention Center in Nashville, Tenn.; Gaylord Texan Resort and Convention Center in Grapevine, Tex. (Dallas-Ft. Worth); Gaylord Palms Resort and Convention Center in Kissimmee, Fla. (Orlando); and Gaylord National Resort and Convention Center in Prince George's County, Md. (Washington, D.C.).

The transaction is the result of a comprehensive review of strategic options to maximize long-term value for Gaylord shareholders. In concluding to pursue this option with Marriott, Gaylord's board of directors and management team focused on three elements: the cash received in connection with the sale of the brand and management rights, the opportunity to realize substantial cost savings and revenue enhancements due to Marriott's scale and reach in the hospitality market, and the company's positioning as a well capitalized REIT focused on group-oriented destination hotels in urban and resort markets.,

"We are pleased to be announcing today a transaction that we believe allows shareholders the potential to realize maximum long-term value for their shares in Gaylord Entertainment," said Gaylord chairman/CEO Colin V. Reed. "Our months-long review of various options led us to the conclusion that the REIT structure represents the best pathway to realize the long-term value of our business and to position the Gaylord brand for continued growth.

"The REIT structure allows us to benefit from a more efficient tax structure, and establish a platform to grow our distinct asset base through organic growth of our existing portfolio and, in time, through strategic acquisitions. Moreover, we believe that by working with Marriott International, our shareholders will benefit from significant property efficiencies and corporate overhead reductions, as well as revenue synergies which include Marriott's ability to attract and market to large group customers. Based on our analysis to date, we anticipate annualized cost synergies, net of management fees, will total approximately $33 to $40 million. In addition, we believe we will have a unique competitive position in the hospitality REIT marketplace with a well capitalized balance sheet and a relatively predictable FFO (funds from operations) stream."

Upon consummation of the transaction, Gaylord Hotels will join the Marriott portfolio of brands. Terms of the management agreement call for Marriott to manage the four one-of-a-kind properties under the Gaylord Hotels flag. Marriott will receive a management contract with an initial 35 year term, 2 percent base management fee, and an incentive fee linked to improvement in hotel profitability.

 "We have long admired Gaylord, both for the hotels they have created and for their superb job in hosting major meetings and events," said Arne Sorenson, Marriott International president and chief executive officer. "We also have great respect for Gaylord's commitment to their people.  ... Working with the Gaylord brand, the existing four hotels and a Gaylord team that provides outstanding customer service, we are convinced there is tremendous upside potential for growing hotel revenues and profits and developing careers."

Gaylord will continue to own and operate the Grand Ole Opry, Ryman Auditorium and other attractions as taxable REIT subsidiaries. Nothing will change at these iconic assets of the Nashville community, and Gaylord is fully committed to maintaining the legacy of these historic attractions, the company said.

"We continue to see positive outside-the-room spending and advance bookings trends in our business from both our group and leisure transient guests," Reed added. "We believe that the cost management initiatives we have put in place to date will continue to drive solid margin performance, and that the strengthening we have seen in group behavior will create additional revenue and profitability opportunities for us in the remainder of 2012."

Lennar Announces New 400-Home Community Near Charlotte

Lennar, one of the nation's largest home builders, recently announced it will create a new 400-home community in the burgeoning Indian Land, S.C., area, called Carolina Reserve. The new master-planned upscale community will offer Charlotte homebuyers an attractive new option for high-quality, affordable suburban living.

Carolina Reserve will feature four distinct neighborhoods providing families with a variety of home styles and features.  The community will boast a wide range of floor plans, from low-maintenance ranches to expansive single-family homes, to suit the needs of everyone from young families to empty nesters

"After several weeks of planning, design and input from many local government officials, we have arrived at a plan that offers more than 70 acres of open space and eventually, 400 beautiful Lennar homes," said Lennar Charlotte Division President Jon Hardy.  "To achieve the diversity we feel is vital to any successful community, we intend to designate half of the homes to those ready for a more care-free lifestyle, and the other half to families looking for a larger yard and more living space."

Plans call for a pool and clubhouse along with the 70 acres of green space, which features Six Mile Creek and several tributaries flowing through the community.  The location is just minutes from the popular Ballantyne area's offices, shopping, dining and entertainment.  For recreation lovers there are several golf courses nearby, as well as the scenic Catawba River.

Carolina Reserve represents Lennar's 22nd active community in the Queen City metro, including several others in the South Charlotte area:  Springfield, a golf course community in Fort Mill, S.C.; Carolina Village, offering a range of floor plans starting around $200,000 in Pineville; Ballanmoor, featuring estate-style homes in the shadows of Charlotte's popular Ballantyne area; and Lawson, Lennar's newest master-planned community in the charming town of Waxhaw.

"We see strong signs of the new-home market rebounding in Charlotte, and the south metro area is definitely doing its part to contribute toward this resurgence," added Lennar's Hardy.  "We're excited to add Carolina Reserve to our portfolio of neighborhoods and give even more homebuyers a chance to experience the difference in quality and value of a Lennar home."

Lennar Corp., founded in 1954 and headquartered in Miami, has real estate developments in 18 states.

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