Boca Resorts Picked as Buyout Candidate

BOCA RATON, FL-Boca Resorts Inc. is being singled out as a possible acquisition target because of its strong earnings performance this year, a portfolio of exclusive Florida resort properties and its recent refocus on core operations.

The Boca Raton owner-operator of class A resorts, however, is refuting speculation that Raymond James & Associates Inc., a St. Petersburg, FL, investment banking and securities firm, published in a recent stock market report.

“We have no plans to be taken out at all,” Ron Castell, a Boca Resorts senior vice president, tells GlobeSt.com.

That doesn’t dissuade William A. Crow, a Raymond James lodging industry analyst, from his opinion, however. “As far as a takeout goes, it just makes sense,” Crow tells GlobeSt.com. “But it wasn’t going to happen prior to them selling the hockey team.”

It’s not just the $101 million sale of the Florida Panthers professional hockey team in late July to a private investment group that intrigues Crow. There is also the $335 million closing last December on the sale of the Arizona Biltmore Resort & Spa to KSL Recreation Corp.

“They now have a small but very high quality portfolio of assets located in a single state– most of which are unencumbered by franchise flags or brands,” he says. Then there is the company’s recent earnings performance, Crow says.

At a time when many lodging providers are foundering in a soft economy, Boca Resorts closed the fourth quarter ended June 30 with an 8.1% increase in total revenue per available room and a 3.1% increase in hotel room occupancy.

Excluding extraordinary expenses and income taxes, the company also exceeded a fourth-quarter earnings forecast of four cents per share by one cent, as tracked by First Call/Thomson Financial. It met the year-end consensus estimate of eight cents a share.

Not including the potential for an insider buyout, maybe even led by H. Wayne Huizenga, Boca Resort’s chairman, Crow has identified three possible suitors, including Starwood Hotels & Resorts Worldwide, Host Marriott Corp., Canadian Pacific Ltd. and Six Continents Plc (formerly Bass Plc).

The resort company’s Florida-based portfolio, and positive increase in RevPar, could weigh heavily on the minds of lodging industry executives who are looking for ways to improve shareholder value–especially for companies like Host Marriott.

“Their only positive RevPar growth was in their Florida properties,” Crow says about Host Marriott’s recent financial performance.