AUSTIN, Texas--(BUSINESS WIRE)--Summit Hotel Properties, Inc. (NYSE:INN) (the “Company”) today announced that it has closed on the acquisition of two of the four hotels previously announced as part of the Company’s September 12, 2013 offering of common stock. The Company also announced the disposition of three hotels and the successful execution of the Company’s new $300 million senior unsecured credit facility.
The Company has closed on two of the three previously announced Southern California hotels. The two hotels have a total of 223-guestrooms and are both unencumbered by debt.
The Company acquired the 115-guestroom Hampton Inn & Suites located in Ventura (Camarillo), CA for $15.8 million. The hotel was built in 2004 and the Company anticipates spending approximately $1.3 million in capital improvements over the next 12 months. The Company anticipates a post-renovation estimated NTM capitalization rate in the range of 8.5 percent to 9.25 percent based on management’s current estimate of net operating income.
The Hampton Inn & Suites in Ventura (Camarillo) provides access to several large corporate demand generators including Verizon and Lockheed Martin. In addition, the hotel offers significant leisure demand generators with Southern California’s hottest attractions within easy driving distance: Universal Studios, Disneyland®, Hollywood, Beverly Hills, the scenic Pacific Coast Highway and Malibu's pristine beaches.
The Company also acquired the 108-guestroom Hampton Inn & Suites located in San Diego (Poway), CA for $15.2 million. The hotel was built in 2008 and the Company anticipates spending approximately $0.3 million on capital improvements over the next 12 months. The Company anticipates a post-renovation estimated NTM capitalization rate in the range of 8.5 percent to 9.25 percent based on management’s current estimate of net operating income.
The Hampton Inn & Suites in San Diego (Poway) provides both strong weekday business demand and weekend leisure demand. The Poway Business Park has grown consistently since its inception in 2007 and continued expansion is expected. Located just minutes north of San Diego, the hotel also provides strong leisure demand from attractions such as the USS Midway Museum, SeaWorld®, Petco® Park, Qualcomm® Stadium, San Diego Zoo and LEGOLAND® California.
The Company announced that during the third quarter, it closed on the dispositions of the 78-guestroom SpringHill Suites located in Lithia Springs, GA, the 71-guestroom Fairfield Inn located in Lewisville, TX and the 63-guestroom Fairfield Inn located in Lakewood, CO. The Company sold the three hotels for a total sale price of $7.2 million.
“We continue to be focused on creating shareholder value through acquisition of premium select service hotels with strong growth profiles. In addition, the continued disposition of hotels we no longer see as strategic keeps our portfolio’s quality and growth profile aligned with our strategy of having the best premium select service brands in the best markets nationwide,” said Company President and CEO Dan Hansen.
On October 10, 2013, the Company completed a new $300 million senior unsecured credit facility to replace its $150 million senior secured revolving credit facility. The unsecured credit facility is comprised of a $225 million revolving credit facility and a $75 million term loan. In addition to moving to an unsecured structure and increasing the maximum size of the facility, the company was able to lower the interest rate spread on outstanding borowings and extend the term of the maturity by two and a half years to October 10, 2017. The credit facility has an accordion feature which will allow the Company to increase the capacity by $100 million in either additional revolver capacity or an additional term loan. Deutsche Bank AG New York Branch is the administrative agent and Deutsche Bank Securities Inc. is the lead manager. The syndication of lenders includes Deutsche Bank AG; Bank of America, N.A.; Royal Bank of Canada; Key Bank National Association; Regions Bank; Fifth Third Bank; Raymond James Bank, N.A.; and U.S. Bank National Association.
“We are very satisfied with the completion of our unsecured credit facility,” said Company Executive Vice President and Chief Financial Officer Stuart Becker. “We continue to see opportunities to acquire additional strategic hotels. Thus, expanding our financing capacity with a more flexible unsecured credit facility, while reducing our financing costs, is very positive for our company.”
About Summit Hotel Properties
Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused primarily on acquiring and owning premium-branded select-service hotels in the upscale and upper midscale segments of the lodging industry. As of October 14, 2013, the Company’s portfolio consisted of 94 hotels with a total of 11,136 guestrooms located in 24 states.
Forward Looking Statements
This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as “may,” “will,” “should,” “potential,” “intend,” “expect,” “seek,” “anticipate,” “estimate,” “approximately,” “believe,” “could,” “project,” “predict,” “forecast,” “continue,” “plan” or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies and financial and operating projections or other forward-looking information. These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the company and many of which are beyond the company’s control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry and other factors as are described in greater detail in the company’s filings with the Securities and Exchange Commission, including, without limitation, the company’s Annual Report on Form 10-K for the year ended December 31, 2012. Unless legally required, the company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
Additional information may be found at the Company’s website, www.shpreit.com.