American Realty Capital Hospitality Trust has agreed to acquire a portfolio of 26 hotels for a purchase price of $351.4 million from REIT Summit Hotel Properties. The portfolio consists of 25 branded select-service and extended-stay hotels and one full-service hotel. It 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.
ARC Hospitality has been busy of late scooping up portfolios. Last week, it announced it would would acquire a portfolio of five hotels totaling 565 rooms for a purchase price of $92.5 million from affiliates of Wheelock Real Estate Fund, L.P. sponsored by Wheelock Street Capital, 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.
"The Summit Portfolio represents an ideal property fit for ARC Hospitality. We are pleased to add this portfolio of high-quality, stabilized lodging properties with strong brand affiliations to our expanding platform," said Jonathan P. Mehlman, CEO of ARC Hospitality. "We are excited to acquire a portfolio that we believe offers both an attractive yield and price per key, as well as scale, brand power, and consistent and growing cash flows that in our view have been unmatched among marketed portfolios this year. We believe it is still an opportune time to acquire well-located, high-quality upscale and upper midscale hotels as the lodging cycle, and the select-service segment in particular, continues its extended recovery. We believe this acquisition will contribute to our vision of creating a best-in-class portfolio that supports our strategy of providing consistent distributions and the potential for capital appreciation to our investors."
Edward Hoganson, CFO of ARC Hospitality, added, "We are pleased to announce the acquisition of this premier, well-located portfolio that we believe exhibits strong in-place operating fundamentals as well as attractive growth opportunities. Working with Dan Hansen and the Summit management team on this off-market transaction has been a smooth and efficient process, and we look forward to continuing our collaboration with his exceptional team, as well as with the franchise brands, through the closing of this transaction."
Added Summit CEO Dan Hansen, "We are very excited at the opportunity to recycle capital on a larger scale. This proposed transaction will enable us to continue to improve our asset mix and upgrade our portfolio with additional accretive acquisitions with strong growth profiles and diverse demand generators. Recycling capital to create long-term value for our shareholders is a proven strategy for us and one we consider to be a core strength."