NEW YORK—American Realty Capital Hospitality Trust, Inc. (ARC Hospitality) has agreed to acquire a portfolio of 26 hotels for a purchase price of $351.4 million from Summit Hotel Properties, Inc., a publicly traded hotel real estate investment.
The Summit portfolio consists of 25 premium-branded, select-service and extended-stay hotels and one full-service hotel, and totals 2,793 rooms in 11 states. The hotels are franchised by major global brands including Marriott International, Hilton Hotels & Resorts, Hyatt Hotels and InterContinental Hotels Group. Leading flags include Fairfield Inn & Suites, Courtyard by Marriott, Hampton Inn, SpringHill Suites and Residence Inn.
This acquisition announcement follows on the heels of ARC Hospitality revealing that it intends on acquiring a portfolio of five hotels totaling 565 rooms for a purchase price of $92.5 million from affiliates of Wheelock Real Estate Fund, L.P. sponsored by Wheelock Street Capital, LLC, a real estate private equity firm.
The acquisitions of the Summit and Wheelock portfolios, when completed, will increase ARC Hospitality’s lodging portfolio to 153 hotels totaling 18,280 rooms across 33 states.
“The Summit portfolio represents an ideal property fit for ARC Hospitality. We are pleased to add this portfolio of high-quality, stabilized lodging properties with strong brand affiliations to our expanding platform,” commented Jonathan P. Mehlman, CEO of ARC Hospitality. “We are excited to acquire a portfolio that we believe offers both an attractive yield and price per key, as well as scale, brand power, and consistent and growing cash flows that in our view have been unmatched among marketed portfolios this year. We believe it is still an opportune time to acquire well-located, high-quality upscale and upper-midscale hotels as the lodging cycle, and the select-service segment in particular, continues its extended recovery. We believe this acquisition will contribute to our vision of creating a best-in-class portfolio that supports our strategy of providing consistent distributions and the potential for capital appreciation to our investors.”
Edward Hoganson, CFO of ARC Hospitality, added, “We are pleased to announce the acquisition of this premier, well-located portfolio that we believe exhibits strong in-place operating fundamentals as well as attractive growth opportunities. Working with Dan Hansen and the Summit management team on this off-market transaction has been a smooth and efficient process, and we look forward to continuing our collaboration with his exceptional team, as well as with the franchise brands, through the closing of this transaction.”
The acquisition, which is encompassed in two separate purchase and sale agreements, is subject to customary franchisor approvals and the completion of customary and confirmatory due diligence, as well as other conditions. The acquisition is expected to close in three separate tranches (which are not conditioned on each other), with the current estimated sale dates in September and October of this year and January 2016, subject to extension under certain circumstances. ARC Hospitality intends to secure debt financing in connection with the acquisition.
ARC Hospitality was represented by Proskauer Rose, which also represented ARC Hospitality in connection with the acquisition of the Wheelock portfolio.