AUSTIN, Texas--(BUSINESS WIRE)--Summit Hotel Properties (NYSE:INN) (“the Company”) announced today the acquisition of the Hilton Garden Inn located in the Energy Corridor of Houston, Tex. and the disposition of the Hampton Inn located in Fort Smith, Ark. The acquisition marks the second Hilton Garden Inn owned by Summit in the Houston area.
The Company acquired the 190-guestroom Hilton Garden Inn located in Houston, Tex. on August 15, 2014 for a total purchase price of $36.0 million and entered into a management agreement with American Liberty Hospitality, Inc. The property was built in 2008 and the Company anticipates spending approximately $3.2 million in capital improvements over the next twelve months. The Company anticipates an estimated post-renovation next twelve month (“NTM”) capitalization rate in the range of 8.00 percent to 8.50 percent based on management’s current estimate of future net operating income. The Company expects the hotel to generate approximately $1.1 million of adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) in 2014.
“We are very pleased with the acquisition of our second property in the Houston market. This high yielding asset in a market with multiple demand generators makes it a perfect addition to our portfolio. We see great opportunity for our asset management team to create additional value through operational improvements and believe this asset will create tremendous near-term and long-term shareholder value,” said Company President and CEO Dan Hansen.
The Hilton Garden Inn is located in the heart of the Houston Energy Corridor, which is home to many of the world’s largest energy companies including BP America, Citgo Petroleum, ConocoPhillips, ExxonMobil and Shell Oil Company. With nearly 19 million square feet of existing office space and an estimated 10.7 million of additional square feet to be added by 2030, the Energy Corridor will be a central focus for Houston’s economic growth for years to come.
The Company also announced the completed disposition of the 178-guestroom Hampton Inn located in Fort Smith, Ark. on September 9, 2014 for a total sales price of $8.8 million. This was the final property classified as held for sale by the Company and completes the Company’s exit from the Fort Smith market. The Company estimates the property would have contributed approximately $0.2 million of EBITDA during the balance of 2014.
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 September 10, 2014, the Company’s portfolio consisted of 90 hotels with a total of 11,380 guestrooms located in 21 states.
For additional information, please visit the Company’s website, www.shpreit.com and follow the Company on Twitter at @SummitHotel_INN.
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 Exchange 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,” “likely,” “would” or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, 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 (“SEC”), including, without limitation, the Company’s Annual Report on Form 10-K for the year ended December 31, 2013. 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.