Summit Hotel Properties and Xenia Hotels & Resorts announced that the companies have executed a definitive agreement for an affiliate of Summit to acquire an 812-guestroom, five-hotel portfolio from Xenia for a total purchase price of $163 million, or approximately $201,000 per key.
The portfolio comprises the 203-guestroom Courtyard Fort Worth (Texas) Downtown/Blackstone, the 123-guestroom Courtyard Kansas City Country Club Plaza, the 182-guestroom Courtyard Pittsburgh Downtown, the 116-guestroom Hampton Inn & Suites Baltimore Inner Harbor, and the 188-guestroom Residence Inn Baltimore Downtown/Inner Harbor. The total purchase price represents an 11.1x multiple on the hotels' combined trailing 12-month earnings before interest, taxes, depreciation and amortization as of April 2017. The portfolio achieved revenue per available room of $115.52 during the same period.
"The completion of this transaction will represent the continued execution of our strategy of acquiring premium-branded upscale hotels with efficient operating models while maintaining a geographically diversified portfolio," said the chairman, president and CEO of Summit, Daniel P. Hansen. "All five of these hotels are located in prime locations in strong markets and exhibit many of the upside characteristics that are important to our investment criteria. We are pleased to work on this deal with the team at Xenia and look forward to completing the transaction."
In conjunction with the acquisitions, Summit will be executing new franchise agreements with the respective franchisors for the hotels and expects to spend approximately $13 million to $16 million in capital improvements required under these agreements over the next two years.
"We are pleased to have entered into this agreement with Summit, as we strongly believe this to be a mutually beneficial strategic transaction," said Marcel Verbaas, president and CEO of Xenia. "While these hotels fit well within Summit's portfolio of quality, upscale hotels, the completion of this transaction and our recent acquisition of the Hyatt Regency Grand Cypress represent a further refinement of our portfolio, consistent with our strategic focus on primarily owning luxury and upper upscale assets in top 25 lodging markets and key leisure destinations."
The closing of the transaction is subject to the satisfaction of certain customary closing conditions and is expected to occur within the next 30 days.