Summit Hotel Properties Announces Pending Acquisition of Two-Hotel Portfolio for $96 Million Through GIC Joint Venture
PR Newswire
AUSTIN, Texas, Dec. 10, 2024
AUSTIN, Texas, Dec. 10, 2024 /PRNewswire/ -- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company"), through its joint venture with GIC, today announced that it is under contract to acquire the 250-guestroom Hampton Inn Boston - Logan Airport and the 149-guestroom Hilton Garden Inn Tysons Corner for a combined purchase price of $96.0 million, or $241,000 per key. The purchase price represents an 8.8% capitalization rate based on forecasted 2024 net operating income and no meaningful capital expenditures are planned prior to the fourth quarter of 2026.
"We are excited to announce the pending acquisition of the Hampton Inn Boston - Logan Airport and Hilton Garden Inn Tysons Corner through our joint venture with GIC. These two premium-branded hotels are located in high barrier-to-entry, gateway city submarkets and generate RevPAR, EBITDA margin and EBITDA per key metrics that are accretive to our existing portfolio of high-quality hotels. The purchase price represents an attractive going-in yield and a significant discount to estimated replacement cost," said Jonathan P. Stanner, the Company's President and Chief Executive Officer. "The transaction represents the continuation of our successful capital allocation strategy and has been facilitated by recent asset sales which generated nearly $150 million of proceeds and eliminated approximately $50 million of near-term capital expenditures," continued Mr. Stanner.
The Hampton Inn Boston -- Logan Airport is located just 2.5 miles from the Boston Logan International Airport and less than a 10-minute drive to Downtown Boston. Boston's diverse demand drivers including corporate, group, education, healthcare, and leisure demand make it one of the strongest lodging performance and investment markets in the U.S. The Boston Logan International Airport served more than 40 million passengers in 2023 and is currently undergoing a multi-year modernization investment project totaling $2 billion to accommodate increasing travel demand in and out of the region that will further benefit the hotel going forward. The hotel features a 368-space surface-level parking lot, a portion of which is leased to a third-party parking operator creating a durable and meaningful ancillary revenue source for the hotel.
The Hilton Garden Inn Tysons Corner is situated in the affluent city of Vienna, Virginia, in Fairfax County, just 11 miles west of downtown Washington, D.C., and is the closest Hilton-branded select service hotel to Hilton world headquarters. Tysons Corner is one of Virginia's principal business districts and home to five Fortune 500 companies. In addition to its preeminent office market, Tysons is home to the Tysons Corner Center, one of the largest shopping centers and mixed-use developments in the U.S., with annual visitation spending of $2.4 billion and a strong employment CAGR of 14% since 2010.
The transaction is expected to be financed with a mix of cash on hand and a $50 million term loan raised in conjunction with exercising a portion of the accordion option on the GIC joint venture's existing $200 million credit facility. The term loan will have an interest rate of SOFR + 210 basis points, and a fully extended maturity date of September 2028. The Company's estimated $24 million of required equity for its 51% share of the transaction will be funded primarily from the net sale proceeds from the recently completed sale of the Four Points by Sheraton San Francisco Airport as well as cash on hand. Combined with the attractive in-place yield of the acquisition, the recently completed sale results in a leverage-neutral transaction. The transaction is expected to close in the fourth quarter of 2024, and the Company makes no assurances that the transaction will be completed on the agreed-upon terms or at all.
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 December 10, 2024, the Company's portfolio consisted of 95 hotels, 53 of which are wholly owned, with a total of 14,154 guestrooms located in 24 states.
For additional information, please visit the Company's website, www.shpreit.com, and follow on X 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 financial and operational synergies; projections of revenues and expenses or other financial items; descriptions of the Company's plans or objectives for future operations; forecasts of EBITDAre; 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, 2023, 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.
/CONTACT: Adam Wudel, EVP - Corporate Development, Summit Hotel Properties, Inc., (512) 538-2325
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December 10, 2024 17:00 ET (22:00 GMT)
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