Last week, Loews Hotels & Resorts, a wholly owned subsidiary of Loews Corporation (L - Free Report) , entered into a definitive agreement with CIM Group with the objective of purchasing Renaissance Hotel & Spa in Hollywood, California.
The acquisition is scheduled for completion on June 16. Following which, the 632-room asset will be renamed Loews Hollywood Hotel.
The company expects expenditures for the hotel renovation to be approximately $26 million with completion scheduled for 2013 summer. The renovation will be completed in stages so that the services for the guests are not hampered.
Loews aims to add more hotels to its portfolio in order to take the count from 18 to more than 30 in the next three to five years, besides increasing net income by threefold by 2012. This acquisition is the first in Loews’s plans to nearly double its hotel count.
The hotel features Hollywood & Highland Center, a 460,000-square-foot, five-story construction having more than 80 specialty retail outlets. The complex has 26 restaurants and eateries, two nightclubs, seven movie screens, eight bars and 12 bowling lanes.
The hotel also features 65,000 square feet of meeting space and 25,000-square-feet of ballroom space.
In a separate development, Loews has also planned the renovation of Loews Regency Hotel, New York. This 354-room property in Manhattan would require $70 million for renovation. The renovation is slated to be completed in phases to avoid disruption in providing services to guests and is scheduled for completion in February 2014.
Management stated that with capital at disposal to acquire and develop property, they will seek like opportunities in Boston, Chicago, San Francisco, Washington, D.C., New York, Dallas, Toronto and Seattle to add assets to its portfolio and hence cater to more customers.
Loews Hotels’ net income in the first quarter doubled to $4 million from the year-ago level. We believe the addition of this hotel to its portfolio will help the company to continue to deliver such robust numbers. Also, these steps will boost the company’s hotel business.
The quantitative Zacks #1 Rank (short term Strong Buy rating) for the company indicates boost on the stock over the near term.
Headquartered in New York, Loews Corporation is a diversified holding company. The company’s principal subsidiaries are CNA Financial Corporation (CNA - Free Report) , Diamond Offshore Drilling Inc. (DO - Free Report) , Boardwalk Pipeline Partners LP, Loews Hotels Holding Corporation and HighMount Exploration & Production LLC.