Motels of America to Buy 45 Units for $73 Million
Motels of America Corp., a fast-growing 23-motel chain based in San Diego, plans to buy 45 Super 8 motels this summer in a $73-million cash deal financed through a public master limited partnership.
Acting as general partner, MOA will buy the motels, totaling 2,789 rooms, from Super 8 Motels Inc. of Aberdeen, S.D. Spread over 16 states, the motels being acquired are the only Super 8s among the 400 motels nationwide that Super 8 owns. The rest are franchises, said Guy Hatfield, MOA’s chief executive.
Interests in the master limited partnership will be sold through a national underwriter. The partnership may raise as much as $85 million, with the excess over the purchase price to be used for future deals, Hatfield said.
MOA also plans to open 18 new motels totaling 1,300 rooms over the next 15 months, most of which will operate as Super 8s, Hatfield said. Among the MOA motels under development are a 117-room Super 8 motel in Pacific Beach and a 114-room Comfort Suites motel in Mission Valley.
MOA moved its headquarters to San Diego from Cody, Wyo., in 1983. Of the 23 Super 8 motels it currently operates in nine states, none are located in California, although the chain will open a 95-room motel next month in Palmdale, north of Los Angeles.
To date, MOA has financed most of its motel developments through all-cash limited partnerships sold through securities brokerages. Master limited partnerships, units of which are publicly traded, are an increasingly popular form of financing large real estate deals because they provide investors with liquidity.
MOA revenues last fiscal year totaled $10 million, and the company was “marginally profitable,” Hatfield said. Occupancy rates at the MOA motels’ 1,500 rooms averaged 64% last year, above the 62% national motel occupancy rate, Hatfield said.
By the end of 1988, MOA expects to be an 86-motel chain operating 5,600 rooms, Hatfield said.
In addition to Hatfield, major MOA shareholders include President C. Michael Dolan, Senior Vice President Ian Gardner-Smith, Treasurer Vernon Ellis and Vice President Charles Riedel.
