Summit Hotel Properties Acquires Two Hotels For $60.2 Million
Capital Recycling Continues With the Sale of One Hotel for $14.5 million
Hospitality Investors Trust, Inc. Repays $27.5 Million Loan
AUSTIN, Texas, April 3, 2017 /PRNewswire/ -- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company") reported today the following:
- Completion of the previously announced acquisition of the 129-guestroom Homewood Suites by Hilton Aliso Viejo-Laguna Beach;
- Acquisition of the 152-guestroom Hyatt Place Phoenix-Mesa;
- Sale of the 150-guestroom Hyatt Place Atlanta Airport North; and
- Receipt of proceeds from Hospitality Investors Trust, Inc. (formerly known as American Realty Capital Hospitality Trust, Inc.) ("HIT") for the repayment of a $27.5 million loan.
"We are thrilled with our ability to source unique acquisitions and the continued success of our capital recycling program," said Chairman, President and Chief Executive Officer, Daniel P. Hansen. "In addition to the increased earnings potential, the latest transactions continue to enhance our diverse portfolio of premium-branded hotels. Together, the two acquisitions represent a RevPAR premium of 33.4 percent over the sold hotel," commented Mr. Hansen.
On March 1, 2017, the Company completed the previously announced acquisition of the 129-guestroom Homewood Suites by Hilton Aliso Viejo – Laguna Beach located in Aliso Viejo, CA for a gross purchase price of $38.0 million, or $294,600 per key, and entered into a management agreement with Stonebridge Companies. Opened in 2016, the newly-built hotel will require very limited capital expenditures. The Company estimates a capitalization rate of 8.1 percent based on management's current estimate of the hotel's 2017 net operating income. The Company included the acquisition of this hotel in its 2017 guidance provided on February 23, 2017, and currently estimates that the hotel will contribute approximately $3.1 million of earnings before interest, taxes, depreciation and amortization ("EBITDA") through the balance of 2017. Centrally located in Orange County, CA, the Homewood Suites by Hilton is in close proximity to multiple business and leisure demand generators. National employers such as Microsoft, Pacific Life and QLogic have offices within walking distance of the hotel while Dell, Fluor, Rakuten and Microsemi are less than a mile away. The hotel is also within short driving distance to Laguna Beach, Newport Beach, and Dana Point and is situated between Disneyland and Legoland, allowing families to visit both major attractions while staying in one central location.
On March 30, 2017, the Company acquired the 152-guestroom Hyatt Place Phoenix-Mesa located in Mesa, AZ for a gross purchase price of $22.2 million, or $146,100 per key, and entered into a management agreement with Interstate Hotels & Resorts. The Company plans to invest $1.1 million in capital improvements over the next two years and estimates a capitalization rate, including planned capital expenditures, of 8.3 percent based on management's current estimate of the hotel's 2017 net operating income. Taking into consideration the seasonality of the Phoenix market, the Company estimates the hotel will contribute approximately $1.0 million of EBITDA through the balance of 2017. The Hyatt Place is adjacent to a variety of shopping, dining, and entertainment options, is within walking distance to the Chicago Cubs Sloan Park Spring Training Stadium and just a few miles from the Oakland A's Hohokam Stadium. Additionally, the hotel is only minutes away from Tempe, Scottsdale, Phoenix and Gilbert and has convenient access to local attractions including the Phoenix Zoo, Mesa Arts Center, the Arizona Museum of Natural History, and Arizona State University.
On March 30, 2017, the Company also completed the sale of the 150-guestroom Hyatt Place Atlanta Airport North located in East Point, GA for a total sales price of $14.5 million, or $96,700 per key. The sales price represents a capitalization rate of 7.9 percent based on the hotel's net operating income for the twelve months ended December 31, 2016. The Company estimates that the hotel would have contributed approximately $0.9 million of EBITDA through the remainder of 2017. In conjunction with the sale, the company retired a $6.5 million mortgage loan that was scheduled to mature in August 2018. The hotel was not part of the previously announced disposition of 26 hotels to affiliates of HIT.
On March 31, 2017, HIT repaid the original $27.5 million loan, of which $22.5 million was outstanding, along with $1.2 million of accrued payment-in-kind interest. During the loan term, affiliates of the Company earned $3.7 million of interest income resulting in an internal rate of return 13.9% on the debt investment. The $3.0 million loan made to HIT on January 12, 2017, as consideration for the closing date extension, remains outstanding and its terms and conditions are unchanged. As of March 31, 2017, the Company had $120.0 million outstanding on its senior unsecured revolving credit facility and $180.0 million available to borrow.
About Summit Hotel Properties
Summit Hotel Properties, Inc. is a publicly-traded real estate investment trust focused on owning premium-branded hotels with efficient operating models primarily in the upscale segment of the lodging industry. As of March 31, 2017, the Company's portfolio consisted of 82 hotels with a total of 11,095 guestrooms located in 23 states.
For additional information, please visit the Company's website, www.shpreit.com and follow the Company on Twitter at @SummitHotel_INN.
Forward Looking Statements
This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," "forecast," "continue," "plan," "likely," "would," or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Examples of forward-looking statements include the following: the Company's ability to realize embedded growth from the deployment of renovation capital; projections of the Company's revenues and expenses, capital expenditures or other financial items; descriptions of the Company's plans or objectives for future operations, acquisitions, dispositions, financings or services; forecasts of the Company's future financial performance and potential increases in average daily rate, occupancy, RevPAR, room supply and demand, FFO and AFFO; the Company's outlook with respect to pro forma RevPAR, pro forma RevPAR growth, RevPAR, RevPAR growth, AFFO, AFFO per diluted unit and renovation capital deployed; and descriptions of assumptions underlying or relating to any of the foregoing expectations regarding the timing of their occurrence. These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company's control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry and other factors as are described in greater detail in the Company's filings with the Securities and Exchange Commission ("SEC"). Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
For information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2016, filed with the SEC, and its quarterly and other periodic filings with the SEC. The Company undertakes no duty to update the statements in this release to conform the statements to actual results or changes in the Company's expectations.
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SOURCE Summit Hotel Properties, Inc.