Steven Cohen Buys Gaylord Entertainment as It Converts to REIT
Gaylord Entertainment is a Nashville-based entertainment and hospitality company that owns brands such as Gaylord Hotels, the Grand Ole Opry, and many others. After a strategic review, the company decided to sell its Gaylord Hotels brand and the rights to manage its four hotel to Marriott International Inc. (MAR) for $210 million in cash before it converts to a REIT.
It will be the only lodging REIT focused primarily on group-oriented destination hotels in urban and resort markets.
“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,” Colin V. Reed, Gaylord chairman and CEO said in a statement. “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.”
By year-end, Gaylord will issue a special one-time dividend to shareholders of $415 to 450 million in undistributed earnings and profits, 80 percent of which will be in shares of common stock and 20 percent in cash.
The company also said as a result of the new developments it has changed its plans regarding the Aurora, Colo. hotel and convention center it announced last summer and planned to complete in early 2006. Now it is looking at a smaller-scale development with minimal financial commitment during the development phase.
Gaylord Entertainment has a P/E ratio of 82, P/S ratio of 1.9 and annual average earnings growth of 8.9 percent over the past 10 years.
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