NEW YORK — American Realty Capital (ARC) Hospitality Trust has completed a new term loan facility with Deutsche Bank AG New York Branch and Deutsche Bank Securities Inc. for up to $450 million. The money will finance the company’s acquisition of hotel portfolios from affiliates of Summit Hotel Properties, Noble Investment Group LLC and Wheelock Street Capital LLC.
ARC plans to acquire the three hotel portfolios for a total of $739.8 million. The acquisitions will take place over seven separate closings throughout the next eight months. They will include 44 hotels totaling 5,271 rooms in 18 states.
“These acquisitions are completely consistent with our strategy focused on U.S. select-service and full-service hotels,” says Jonathan Mehlman, president and CEO of ARC Hospitality. “[They will] complement our existing hotel portfolio, which in the first six months of this year, saw RevPAR growth of 7.1 percent.”
Once the acquisitions are completed, ARC Hospitality’s hotel portfolio will contain 166 hotels, totaling 20,195 rooms in 34 states. Most of the hotels are franchised by major global brands, including Marriott International, Hilton Hotels & Resorts, Hyatt Hotels, InterContinental Hotels Group and Starwood Hotels and Resorts.
ARC Hospitality’s new term loan facility may be drawn upon to fund the company’s acquisition of the 44 hotels and for general working capital purposes. The new borrowing facility has a term of up to five years, including extension options. The company’s borrowings are expected to bear interest at a rate equal to 30-day LIBOR, plus a spread of between 2.75 percent and 3.25 percent.
The company’s fee interests in the hotel portfolios will also secure the term loans. Hunton & Williams LLP represented ARC Hospitality in the closing of the credit facility.
New York-based ARC Hospitality is a publicly registered, non-traded REIT. ARC Hospitality’s investment strategy focuses on acquiring stable, institutional-quality and strategically located lodging properties in North America branded by national hotel brands.
— Nellie Day