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February 4, 2013

Summit Hotel Properties to Buy Five New Orleans Hotels for $135M

By Eliza Theiss, Associate Editor

Publicly traded REIT Summit Hotel Properties Inc. has entered into a definitive purchase agreement for a five-hotel portfolio in Louisiana. The properties, all located in the Greater New Orleans area, are expected to be purchased for approximately $135 million. Summit expects to invest around $5 million to upgrade the 823-room portfolio. Renovations of its future assets are expected to be complete in 12 months.

“This portfolio of hotels is uniquely positioned to allow us access to the many diverse markets and submarkets in the area,” said company president & CEO Dan Hansen. Summit estimates a post-upgrade next 12 months’ EBITDA for the entire portfolio of anywhere between 10.5x and 11.5x.

Among the properties to be purchased is the 140-key Courtyard by Marriott in Downtown New Orleans, near the French Quarter. The 124 St. Charles Ave. hotel features 140 rooms on six floors, a new lobby, one meeting room and a total meeting space of 627 square feet. High-speed wireless Internet is available throughout the property. Additional amenities include a fitness center and whirlpool. Dining options include an onsite Starbucks coffee house and The Bistro restaurant, serving an American menu. The hotel is in close proximity to financial and corporate offices such as GE, Whitney Hancock, Xavier University, LSU Medical, AT&T, Verizon as well as the U.S. departments of Justice and Homeland Security.

Another Courtyard by Marriott is also included in the portfolio: the Courtyard New Orleans/Downtown Convention Center, at 300 Julia St., in close proximity to the newly renovated Ernest N. Morial Convention Center. The 202-key, five-story hotel features 192 rooms and 10 suites, as well as five meeting rooms totaling 3,873 square feet. Amenities include a fitness center, outdoor pool and whirlpool. The Bistro brand has a location in that hotel property, as well.

Also in close proximity to the Ernest N. Morial Convention Center is the 208-key SpringHill Suites by Marriott, located at 301 St. Joseph St. The 208-key, four-story property features amenities such as a fitness center, outdoor pool and whirlpool; five meeting rooms comprising 3,700 square feet of space; high-speed wireless Internet throughout; and a sundry/convenience store.

Summit’s purchase also includes two hotels in Metairie, one of the largest communities in the Greater New Orleans metropolitan area. The two assets to be acquired are the 153-room Courtyard by Marriott at 2 Galleria Blvd. and the 120-room Residence Inn by Marriott at 3 Galleria Blvd. The latter comprises 120 rooms on three floors. One meeting room and a total meeting space of 672 square feet are available on the property, as well as an outdoor pool, a whirlpool, a fitness center and a barbecue/picnic area. The neighboring Courtyard features 148 rooms, five suites, four meeting rooms and a total meeting space of 1,957 square feet. High-speed Wi-Fi is available throughout the hotel. Other amenities include a whirlpool, an outdoor pool, a fitness center and a convenience store. A Bistro restaurant can be found on site.

As of Jan. 28, 2013, the Summit Hotel portfolio comprises 9,383 rooms in 86 hotels in 21 states.

Photo courtesy of Courtyard by Marriott New Orleans Downtown near The French Quarter’s Facebook page.

Chart courtesy of Marcus & Millichap