The Marcus Corporation (MCS) recently announced that its operational arm Marcus Hotels & Resorts and associate MCS Capital LLC have inked a deal to buy The Cornhusker Hotel and its attached office property – The Cornhusker Office Plaza situated in Lincoln, Nebraska. The transaction is expected to leverage Marcus Hotels’ 50 years of expertise in landmark hotels refurbishment and portfolio streamlining activity.
This acquisition is the first transaction financed by MCS Capital, which is a new hotel investment business arm of The Marcus Corporation, formed last year. The acquired hotel is the debut property of the Marcus Hotels in Nebraska.
Nebraska on the Great Plains of the Midwestern U.S., is one of the emerging economies of the country with a rapidly developing tourism industry. The state generates over $3.3 billion of annual revenue from the tourism industry. Lincoln – the state capital – and the city of Omaha are the major growth drivers with a majority of world-class hotels. The area already boasts major hoteliers such as Starwood Hotels & Resorts Worldwide Inc. (HOT) and Choice Hotels International Inc. (CHH).
Marcus Hotels and MCS Capital LLC have entered into a joint venture agreement with a fund associate of LEM Capital of Philadelphia for the acquisition of the property. According to the agreement, Marcus hotels will hold 73% ownership in the joint venture. The financial terms of the transaction, which is expected to close in the coming several weeks, have not been divulged.
LEM Capital engages in management of a series of private equity funds with over $500 million of capital commitments under management. In the last 10 years, LEM Capital ihas provided structured debt and equity solutions for real estate owners. It includes joint venture equity, senior equity, preferred equity, mezzanine loans and others.
The 297-room Cornhusker Hotel is located in the midst of downtown Lincoln and in close proximity to major facilities and transportation networks of the state. The hotel, one of the oldest and most prominent hotels in Lincoln, is well furnished with high class amenities. Since its inception in 1983, the hotel has catered for both business and leisure travelers. After the acquisition closure, Marcus Hotels intends to finance extensive renovations. Post-renovation, the property will be branded under the Marriott International, Inc. (MAR) and renamed accordingly as The Cornhusker Marriott Hotel. The adjoining Cornhusker Office Plaza is a seven storey building spanning 85,592 square feet and is 90% occupied.
Marcus Hotels is on line to fulfill its strategy of addition and renovation of high class hotels to boost its portfolio base. Recently, the company also completed the renovation of an AAA Four Diamond hotel - Hilton Milwaukee - located in the heart of downtown Milwaukee.
With the addition of the Cornhusker Hotel, Marcus Hotels now has ownership or management interest in 19 hotels, resorts and other properties across 10 states of the U.S. The company’s portfolio includes a wide range of properties comprised of city-center meeting hotels, upscale resorts and branded first-class hotels.
The Marcus Corporation currently carries a Zacks #2 Rank, which translates into a ‘short-term Buy rating’. We also have a long-term Outperform recommendation on the stock.
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