Summit Hotel Properties to Acquire Two Hotels Worth $96 Million in Strategic Joint Venture
Summit Hotel Properties Announces Strategic Acquisition
In a significant move to expand its portfolio, Summit Hotel Properties, Inc. (NYSE: INN) has revealed plans to acquire two hotels for a total of $96 million. This acquisition is being made through its joint partnership with GIC, a sovereign wealth fund, and is set to enhance the company’s presence in key markets.
Details of the Acquisition
The deal encompasses the 250-guestroom Hampton Inn Boston - Logan Airport and the 149-guestroom Hilton Garden Inn Tysons Corner. The average cost per room is approximately $241,000, a price that reflects an 8.8% capitalization rate based on projected net operating income for the year 2024. Jonathan P. Stanner, the CEO of Summit Hotel Properties, expressed enthusiasm over this acquisition due to the synergy these properties offer with their existing hotel portfolio, promising enhanced performance metrics such as RevPAR (Revenue Per Available Room) and EBITDA margin.
Location and Market Insight
The Hampton Inn Boston is advantageously located just 2.5 miles from Boston Logan International Airport, making it easily accessible for travelers. The airport itself served over 40 million passengers in 2023 and is currently undergoing a $2 billion modernization project to meet rising demand. This backdrop positions the hotel as a promising investment in a vibrant market driven by corporate, group, education, and leisure demands.
On the other hand, the Hilton Garden Inn Tysons Corner is strategically situated in Tysons Corner, Virginia, a bustling business hub that hosts several Fortune 500 companies. This hotel's proximity to one of the largest shopping centers in the U.S., coupled with a strong employment growth rate, underscores its investment potential.
Financing the Acquisition
Summit Hotel Properties plan to fund this acquisition using a blend of cash reserves and a $50 million term loan, which will be drawn from the GIC joint venture’s existing credit facility. This move follows a successful capital allocation strategy, which involved nearly $150 million in asset sales that also reduced upcoming capital expenditure burdens by approximately $50 million. The acquisition aims to close in the fourth quarter of 2024, although there are no assurances regarding the certainty of transaction completion at this time.
About Summit Hotel Properties
As a publicly traded real estate investment trust, Summit Hotel Properties focuses mainly on owning premium-branded hotels with efficient operational models. Currently, the company holds a portfolio of 95 hotels across 24 states, boasting 14,154 guestrooms. The acquisition of these two hotels aligns with their strategy to bolster their collection of high-quality properties across prime markets.
This transaction not only reflects the strength of Summit's growth strategy but also emphasizes the growing demand within premium lodging pathways as business travel rebounds post-pandemic. The strategic foresight in diversifying their offerings showcases Summit Hotel Properties as a significant player in the real estate investment sector.
For those following Summit Hotel Properties’ journey, it is advisable to keep an eye on their developments, especially as they navigate the dynamic landscape of the hospitality industry. This deal signals a robust outlook for their future investments and overall market strategy.
Topics Business Technology）
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