Chicago-based Hyatt Hotels Corp. said Wednesday that its Hyatt Regency subsidiary plans to buy the Peabody Orlando hotel for $717 million, expanding its presence in a market popular with tourists and conventions.
The 1,641-room hotel in Orlando, Fla., is being acquired from UST Hotel Joint Venture Ltd., a company owned by real estate investment companies Belz Enterprises and Estein & Associates USA Ltd.
The deal is expected to close on Oct. 1, and the hotel will be rebranded as the Hyatt Regency Orlando Convention Center. It is located across the street from the Orange County Convention Center.
The hotel will be the sixth Hyatt-branded hotel in Orlando and has more than 200,000 square feet of meeting space.
Hyatt expects the hotel to generate about $10 million of earnings before interest, taxes, depreciation and amortization in the fourth quarter. That will increase to $55 million in 2014, the company said.
Hyatt doesn't plan to invest more money into the hotel because it recently completed a $440 million expansion and renovation.
After the deal was announced, Standard & Poor's ratings services downgraded Hyatt's outlook to negative from stable. S&P said that Hyatt may be using a large portion of its cash to buy the Peabody Orlando hotel.
In a news release, Hyatt did not explain how it would pay for the hotel. A representative from the company did not immediately respond to an emailed request for comment.
Hyatt Hotels operates hotels with the Hyatt, Park Hyatt, Andaz, Grand Hyatt, Hyatt Regency, Hyatt Place and Hyatt House brand names.
Shares of the company rose 26 cents to $43.87 in afternoon trading Wednesday.