Summit Hotel Properties Completes Acquisition of 181-Room Courtyard by Marriott Charlotte City Center for $56.3 Million
AUSTIN, TX. June 19, 2017 - Summit Hotel Properties, Inc. (NYSE: INN) (the "Company") announced today that on June 9, 2017, it completed the acquisition of the 181-guestroom Courtyard by Marriott Charlotte City Center (the "Hotel") for a total purchase price of $56.3 million and entered into a management agreement with OTO Development, LLC.
"The acquisition of the Courtyard by Marriott Charlotte City Center represents a continuation of our capital allocation strategy by acquiring an exceptionally well-located hotel in a strong market, funded partially through the recycling of capital from the sale of a non-core asset. This marks our entrance into the Charlotte market, which has been one of the more dynamic hotel markets over the past three years and boasted the highest office employment growth in the country over the last twelve months," said Chairman, President and Chief Executive Officer, Daniel P. Hansen. "Since our equity raise last month, we have now closed or signed contracts to purchase over $300 million in high-quality, premium-branded hotels that have significant upside and meet our investment criteria," commented Mr. Hansen.
The Company estimates a capitalization rate of 8.3 percent based on management's current estimate of the hotel's net operating income during the first year of ownership. The Company estimates that the hotel will contribute approximately $2.7 million of earnings before interest, taxes, depreciation and amortization ("EBITDA") for the remainder of 2017. For the twelve months ended March 31, 2017, the Hotel had revenue per available room ("RevPAR") of $129 and delivered an EBITDA margin of 54.7 percent, which compares favorably to the Company's total portfolio RevPAR and hotel EBITDA margin of $114 and 37.8 percent, respectively, for the comparable period.
The Hotel's guestrooms and public space were recently renovated, and the Company plans to invest approximately $0.8 million into redesigning the bar and Bistro area that will enhance the guest experience.
Located in the heart of Charlotte's uptown financial and entertainment district, the Hotel is ideal for both business and leisure travelers. The Hotel offers interior access to the Bank of America corporate headquarters, is situated across the street from Wells Fargo's east coast operations headquarters and located just blocks from the Charlotte Convention Center, NASCAR Hall of Fame, EpiCentre, Bechtler Museum of Modern Art, and Harvey Gantt Center. Other nearby attractions include Spectrum Arena, home of the NBA's Charlotte Hornets, Bank of America Stadium, home of the NFL's Carolina Panthers, and Charlotte Motor Speedway, in addition to an array of museums and cultural attractions.
In addition, on June 2, 2017, the Company completed the sale of the 90-guestroom Courtyard El Paso Airport located in El Paso, Texas for $11.2 million. The hotel was sold to a buyer unaffiliated with Hospitality Investors Trust, Inc. (formerly known as American Realty Capital Hospitality Trust, Inc.) and completes the Company's previously announced transaction to sell 26 hotels.
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 June 15, 2017, the Company's portfolio consisted of 76 hotels with a total of 10,796 guestrooms located in 22 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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