American Realty Capital Hospitality Trust has closed on the acquisition of six hotels totaling 707 rooms for a purchase price of $108.3 million from Summit Hotel Properties.
The six hotels acquired are branded either by Marriott International or Hilton Hotels & Resorts and are located in Bellevue and Spokane, Washington, and Denver and Fort Collins, Colorado.
This transaction increases ARC Hospitality’s lodging portfolio to 142 hotels totaling 17,351 rooms across 32 states.
ARC and Summit have also agreed to reinstate their previously terminated agreement in which the company has agreed to acquire a portfolio of 10 hotels, representing the balance of the 26-hotel portfolio acquisition initially announced by the Company in June 2015. ARC Hospitality is scheduled to close on these remaining 10 hotels in late 2016.
“We are pleased to acquire these high-quality lodging properties, located in key Colorado and Washington markets, from Summit,” commented Jonathan P. Mehlman, Chief Executive Officer of ARC Hospitality. “The hotels have been purchased at what we believe is an attractive yield and price per key.
“Moreover, today’s transaction also provides us the opportunity to buy the remaining ten hotels under our original 26-hotel contract with Summit. This transaction shows that we are continuing to execute on our vision of driving long-term shareholder value through the creation of a best-in-class select-service portfolio with strong brands and durable cash flows.”
Edward Hoganson, Chief Financial Officer of ARC Hospitality, added, “With the increased volatility in the capital markets, we have reviewed our acquisitions carefully. Summit has been a great business partner, and we are pleased to be buying another high-performing hotel portfolio transaction with them. We believe our overall portfolio will continue to generate strong, durable income moving forward. Further, we have selected Crestline Hotels and Resorts and Interstate Hotels & Resorts to manage the hotels in this portfolio because of the firms’ proven track record of driving premium revenues and delivering an excellent guest experience.”
ARC Hospitality financed the acquisition of these hotels with a draw on its term loan facility, which was arranged by Deutsche Bank AG New York Branch and Deutsche Bank Securities, Inc. Summit also provided the Company with financing for a portion of the transaction.