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Deals & Dealmakers

ARC hospitality buys $351M hotel portfolio

American Realty Capital Hospitality Trust, Inc. announced today that it 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 trust.

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.

The Company also announced last week that it intends to acquire a portfolio of five hotels totaling 565 rooms (the “Wheelock Portfolio”) 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 Portfolio and Wheelock Portfolio, when completed, will increase ARC Hospitality’s lodging portfolio to 153 hotels totaling 18,280 rooms across 33 states, enhancing the Company’s position as one of the largest owners of select-service hotels (by enterprise value) in the North American lodging REIT sector.

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 2015, October 2015 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.

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