Summit Hotel Properties has completed the acquisition of the 120-guestroom Residence Inn Scottsdale North for $29 million through its joint venture with Singapore-based sovereign wealth fund GIC. The seller and other purchase details were not revealed.
The company expects the hotel to yield between an 8 percent and 8.5 percent capitalization rate on full year estimated 2023 net operating income. The hotel was fully-renovated in 2019 and requires minimal near-term capital expenditures. The company funded its 51 percent interest in the joint venture acquisition using a portion of the net proceeds generated from the recently completed four-hotel portfolio sale.
Located in Phoenix's high-growth North Scottsdale submarket, the hotel is adjacent to TPC Scottsdale, the annual venue for the PGA Tour's WM Open, hosting more than 700,000 attendees. Camelback Mountain and the McDowell Sonoran Preserve are within 20 minutes of the hotel. The hotel also is within one mile of several open-air shopping, dining and entertainment attractions including the Promenade Mall, Kierland Commons and Scottsdale Quarter.
Additionally, the hotel is located directly across North Scottsdale Road from the company's Courtyard and Springhill Suites hotels, both of which are also owned by the GIC joint venture. The company expects the addition of a third Marriott-branded hotel to the existing sales cluster to create revenue and operational synergies.
Other Deals
Summit recently completed the previously announced disposition of four wholly owned hotels totaling 467 guestrooms for a gross sales price of $28.1 million. The portfolio of sold hotels included:
- Hyatt Place Chicago/Lombard/Oak Brook, Ill. 151 rooms
- Hyatt Place Chicago/Hoffman Estates, Ill., 126 rooms
- Hilton Garden Inn Minneapolis/Eden Prairie, 97 rooms
- Holiday Inn Express & Suites Eden Prairie – Minnetonka, Minn., 93 rooms
The transaction represents a 4.2 percent capitalization rate based on the aggregate net operating income of the hotels after a 4 percent FF&E reserve for the twelve months ended Dec. 31. The company will also forego comprehensive renovations that were estimated to be $21 million as a result of the sale. The aggregate gross sales price of $28.1 million, plus estimated future capital improvements, represents a 2.4 percent capitalization rate for the trailing twelve months ended Dec. 31. Net proceeds from the sale were used to fund the company’s 51 percent interest in the aforementioned Residence Inn Scottsdale North joint venture acquisition and reduce the outstanding balance of the company’s unsecured revolving credit facility.
The company also terminated the previously announced agreement to dispose of two wholly owned hotels totaling 283 guestrooms for a gross sales price of $50.5 million. The buyer used its option to terminate the non-binding agreement prior to the expiration of the due diligence period. The two hotels are:
- Residence Inn Atlanta Midtown/Peachtree at 17th, 160 rooms.
- Courtyard Kansas City Country Club Plaza, Mo., 123 rooms.