Summit Hotel Properties Agrees to Sell 26 Hotels for $351.4M To Non-Traded REIT
AUSTIN, TEXAS — Summit Hotel Properties (NYSE: INN) has agreed to sell 26 hotel properties throughout the U.S. to American Realty Capital Hospitality Trust for $351.4 million. The portfolio contains 2,793 rooms, or about 19.6 percent of the company’s pro-forma hotel EBITDA (earnings before interest, taxes, depreciation and amortization).
The hotels are located in Oregon, Louisiana, Texas, Indiana, Arizona, Missouri, Tennessee, Illinois, Florida, Washington and Colorado. The sale of the properties is scheduled to close in three separate tranches. The estimated sales dates are September and October of this year and January 2016.
“We are very excited at the opportunity to recycle capital on a larger scale,” says Dan Hansen, Summit’s president and CEO. “This proposed transaction will enable us to continue to improve our asset mix and upgrade our portfolio with additional accretive acquisitions with strong growth profiles and diverse demand generators.”
Adds Hansen: “Recycling capital to create long-term value for our shareholders is a proven strategy for us and one we consider to be a core strength.”
The total sales price represents a cap rate in the mid-7 percent range based on trailing 12-month net operating income as of March 31.
The 12-month revenue per available room (RevPAR) for the 26 properties was $81.30, 19.7 percent below the pro forma RevPAR for the remaining 64 hotels of $101.26, as of March 31.
American Realty Capital Hospitality Trust will implement a planned capital improvement program upon completion of the deal.
“Through this transformational transaction, we expect to completely deploy the disposition proceeds into acquisitions that will continue to improve our portfolio and provide future growth for our shareholders,” says Hansen.
Based in New York, American Realty Capital Hospitality Trust is a publicly registered, non-traded real estate investment trust that focuses on acquiring stable, institutional-quality and strategically located lodging properties in North America branded by premium national hotel brands.
Austin-based Summit Hotel Properties is a publicly traded REIT that focuses primarily on acquiring and owning premium-branded, select-service hotels in the upscale and upper-midscale segments of the lodging industry. As of June 8, the company’s portfolio contained 91 hotels with a total of 11,679 rooms in 21 states.
Summit’s stock price closed last Friday, June 5, at $13.02 per share, up from $12.77 a year ago.
— Nellie Day