Summit Hotel Properties, Inc. (INN) – a real estate investment trust and hotel investment company – concluded the acquisition of three hotels in Utah, New York and Florida. The company has spent nearly $71.8 million on these purchases.
Summit bought the Residence Inn – a property of Marriott International, Inc. (MAR) in Salt Lake City, Utah – for $20.0 million. Further, it purchased Hyatt Place in Long Island (Garden City), New York for $31.0 million and the Hampton Inn & Suites in Tampa, Florida for $20.8 million. The company acquired Hyatt Place and Hampton Inn from OTO Development, LLC.
Summit Hotel expects the acquisition of Residence Inn to provide a post-renovation estimated NTM EBITDA multiple in the range of 10.5x – 11.5x based on management’s current EBITDA estimate. It expects to spend nearly $6.5 million for revamping this property. The acquisition of this property was announced on September 26, 2012 and the deal was closed on December 21.
Further, Hyatt Place and Hampton Inn are expected to generate post-renovation estimated NTM EBITDA multiple in the range of11.0x – 12.0x and 10.5x – 11.5x, respectively. In addition, the company estimates nearly $0.3 million and $2 million in expenditures for the renovation of Hyatt place and Hampton Inn respectively. The company concluded both the deals on December 27.
Moreover, Summit Hotel sold the Courtyard by Marriott Hotel in Missoula, Montana on December 11. The company received $7.65 million in sale proceeds.
Summit Hotel anticipates an upgrade at these hotels within the next one and a half years. The expenditure for the development of these acquired properties will be funded from the available liquidity as well as additional borrowings under the company's senior secured revolving credit facility.
Summit Hotel announced a stock offering on December 21. The company sealed these acquisitions with the proceeds from the capital received. This reflects the company’s ability to swiftly mobilize its capital towards the acquisition deals, which would prove lucrative going forward.
Summit Hotel currently retains a Zacks #3 Rank, which translates into a short-term Hold rating.
More From Zacks.com