Summit Hotel Properties Finalizes $164 Million Portfolio Purchase
Summit Hotel Properties Finalizes 4 Million Portfolio Purchase
Austin Firm Buys Courtyard New Haven at Yale, Residence Inn Cleveland Downtown, Hilton Garden Inn Boston/Waltham and Homewood Suites by Hilton Tucson/St. Philip’s Plaza University
Two weeks after disclosing the agreement, leading U.S. hotel owner/operator Summit Hotel Properties (NYSE: INN) has finalized its deal with Noble Investment Group out of Atlanta to acquire four hotels totaling 652 guestrooms for $164 million, or approximately $252,000 per key, in an off-market transaction.
Summit’s investment includes the 207-guestroom Courtyard New Haven at Yale; the 175-guestroom Residence Inn Cleveland Downtown; the 148-guestroom Hilton Garden Inn Boston/Waltham; and the 122-guestroom Homewood Suites by Hilton Tucson/St. Philip’s Plaza University.
At the time of the original agreement, Daniel P. Hansen, chairman, president and CEO of Summit Hotel Properties, noted that the aggregate purchase price represents a 12.1x multiple on the hotels’ combined trailing 12-month EBITDA as of September 2017, and the portfolio achieved RevPAR of $124 during that same period.
“The transaction will bring our year-to-date acquisition activity to nearly $600 million as we continue to grow our portfolio with a prudent capital allocation strategy focused on acquiring premium-branded upscale hotels with efficient operating models while maintaining a geographically diversified portfolio,” Hansen added. The company estimated a capitalization rate of 7.8% at the time of the agreement.
Summit will enter into new franchise agreements with the current hotel operators and anticipates investing roughly $7-$9 million in upgrades to the hotels over the next two years.
The acquisition marks the first investments in Connecticut and Ohio, and its first in Tucson, AZ, for Summit Hotel Properties, an Austin, TX-based real estate investment trust that targets premium-branded select-service hotels nationwide. The company now owns 83 hotels comprising 12,242 guestrooms in 26 states.
Summit’s latest acquisition follows the announcement on November 14 that after three years with the company, executive vice president and CFO Gregory A. Dowell will retire from the firm on March 31, 2018. Jonathan P. Stanner, executive vice president and current CIO of Summit Hotel Properties, has been appointed to succeed Dowell.
For more information on Summit Hotel Properties’ portfolio acquisition, please see CoStar Comp #4060933.