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Debt & Equity

ARC Hospitality closes on $450M loan for hotel buy

American Realty Capital Hospitality Trust, Inc. has completed a new term loan facility with Deutsche Bank AG New York Branch and Deutsche Bank Securities Inc. which will provide up to $450 million in financing for the company’s acquisitions of separate hotel portfolios from affiliates of each of Summit Hotel Properties, Noble Investment Group, LLC and Wheelock Street Capital, LLC.

The three hotel portfolios are expected to be acquired for an aggregate purchase price of $739.8 million in seven separate closings scheduled over the next eight months, and encompass 44 hotels totaling 5,271 rooms in 18 states.

Jonathan P. Mehlman, president and CEO of ARC Hospitality, commented, “Upon the completion of these acquisitions, our hotel portfolio will be comprised of 166 hotels, comprising 20,195 rooms in 34 states, franchised by major global brands including Marriott International, Hilton Hotels & Resorts, Hyatt Hotels, InterContinental Hotels Group and Starwood Hotels and Resorts.

“These acquisitions are completely consistent with our strategy focused on U.S. select service and full service hotels, and complement our existing hotel portfolio which in the first six months of this year saw RevPAR growth of 7.1%.”

The new term loan facility may be drawn from time to time to fund the Company’s acquisition of the 44 hotels and for general working capital purposes.

The new borrowing facility has a term of up to five years including extension options and the Company’s borrowings are expected to bear interest at a rate equal to 30-day LIBOR plus a spread of between 2.75 and 3.25 percent.

The company’s fee interests in the hotels will secure the term loans.

ARC Hospitality was represented by Hunton & Williams LLP.

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