Host Marriott mulls Fairfield sale, takes New York hotel stake

Abstract

In an SEC filing, Host Marriott Corp disclosed that it is in talks to sell most of its 30 Fairfield Inn hotels and is foreclosing on two owners of a 39% equity interest in the New York Marriott Marquis.

BETHESDA, Md. -- Host Marriott Corp. said it is in talks to sell most of its 30 Fairfield Inn hotels and is foreclosing on two owners of a 39% equity interest in the New York Marriott Marquis.

The moves were disclosed in a Securities and Exchange Commission filing last week in connection with a proposed offering of 17.5 million common shares.

Host Marriott said it would record a fourth-quarter charge against earnings of about $11 million to write down 15 of the Fairfield Inn properties to their "individual estimated net realizable value." A spokesman said accounting rules require the write-down even though the company expects a gain on the aggregate sale.

If the sale is completed, the hotels would continue to operate as Fairfield Inns under management by Marriott International Inc. Marriott Corp. split in October into Marriott International, a management company, and Host Marriott, a real-estate and travel-concessions concern.

Atlanta architect and developer John C. Portman Jr. said he is giving back a 29% interest in the New York Marriott Marquis but that he and some associates will continue to own 11% of the property. Host Marriott, which owns 50% of the hotel, said it also is assuming control of the 10% interest owned by a limited partnership whose partners include J.W. Marriott Jr. and Richard E. Marriott.

J.W. Marriott is chairman and president of Marriott International; his younger brother, Richard, is chairman of Host Marriott. A spokesman called the foreclosures "very amicable."

Host Marriott said it is consolidating the Times Square Hotel Co., the parent company of the New York Marriott Marquis, in the 1993 fourth quarter. The company said the actions will result in an increase in debt and other liabilities of approximately $445 million.

Mr. Portman's development company ran into trouble in 1990 after taking on debt rapidly during a 1980s expansion. He reached a debt-restructuring agreement with about 50 banks and investors in 1991 that gave him five years to shore up his real-estate empire.