Cerberus Wins Innkeepers Hotel Auction

NEW YORK, May 3 (Reuters) – Private equity firm Cerberus Capital Management and Chatham Lodging Trust won an auction for the bulk of the hotels owned by bankrupt Innkeepers USA Trust, according to sources familiar with the matter.

The pair will pay $1.12 billion for 64 of the chain’s hotels, according to two of the sources.
Chatham also won a second auction, agreeing to pay $195 million for five additional hotels that Innkeepers was selling separately, one of the sources said.

A spokesman for Chatham said the company would issue a press release soon and declined to comment further.

Cerberus declined to comment. A spokeswoman for Innkeepers was not immediately available for comment.

Innkeepers, which filed for bankruptcy in July 2010, had gone into the auction with a deal with Five Mile Capital and Lehman Ali, a unit of Lehman Brothers Holdings Inc.

Innkeepers owns and operates hotels under such brands as Hilton, Hyatt and Marriott, and said when it filed for bankruptcy that its debt load made it difficult to maintain and upgrade its properties.

It had first filed a plan that involved Lehman Ali and the chain’s previous equity owner, Apollo Investment Corp, but creditors objected to that agreement and the bankruptcy court agreed, refusing to approve it.

The company has a hearing scheduled for May 10 during which a bankruptcy court judge will consider whether to approve the latest plan, paving the way for the company to send it to creditors for a vote.

The Innkeepers auction, which included the sales of the two groups of hotels, began Monday and wrapped up on Tuesday afternoon, sources said.

The case is in re: Innkeepers USA Trust, U.S. Bankruptcy Court, Southern District of New York, No. 10-13800.

(Reporting by Nick Brown, Megan Davies and Caroline Humer; Editing by Steve Orlofsky and Richard Chang)