Summit to Purchase 8-Hotel Hyatt Portfolio for $87M
- Sep 28, 2012
Summit Hotel Properties Inc.’s portfolio is about to grow by 1,043 guestrooms. The lodging REIT has signed a deal with affiliates of Hyatt Hotels Corp. to purchase a group of eight Hyatt Place and Hyatt House lodging destinations for $87.4 million.
The assets are spread out between the Southwest and the Mid-Atlantic, and points in between. Three of the hotels are sited in metropolitan Denver, Colo., including the 127-room Hyatt Place-Park Meadows in Lone Tree, as well as the 126-room Hyatt Place-Denver Tech Center and the 135-room Hyatt House-Denver Tech Center in Englewood. Arizona is the location of two more, Hyatt Place-Phoenix and Hyatt Place-Scottsdale, offering 127 rooms each. Rounding out the group are the 127-room, suburban Dallas Hyatt Place-Arlington in Arlington, Tex.; Hyatt Place-Lombard, featuring 151 rooms in the Chicago-area city of Lombard; and Hyatt Place Owings Mills, a 123-unit hotel in Owings Mills, Md., just outside of Baltimore.
All eight properties come free and clear of debt and together, have an average occupancy level of 74 percent, outshining the national hotel market, which, according to a report by Marcus & Millichap Real Estate Investment Services, is expected to record an increased occupancy level of 61.1 percent for 2012. Summit has entered into an agreement with a Hyatt affiliate, Select Hotels Group L.L.C., to manage the properties. The transaction is on track to close during the fourth quarter of this year.
And there’s more. In addition to snapping up the Hyatt portfolio, Summit just announced that it has committed to buying the 98-room Hilton Garden Inn in Fort Worth, Tex., and the 178-room Residence Inn in Salt Lake City, Utah, at the respective prices of $7.2 million and $20 million.
“We have been very active in executing on our strategy of deploying capital in the top fifty U.S. markets,” Dan Hansen, president and CEO of Summit, said in the REIT’s second quarter earnings report.
It’s been a busy year for U.S. hotel investment sales. During the first five months, transaction volume climbed to $5.1 billion, according to a report by lodging real estate services firm Jones Lang LaSalle Hotels, marking the second highest volume for the period since 2008. While one-offs have accounted for the majority of the transactions, portfolio deals have been playing their part. In September, affiliates of Wheelock Street Capital acquired a group of 12 select-service properties from Inland American Real Estate Trust Inc. and three full-service facilities from Sunstone Hotel Investors for an aggregate $221 million. Earlier in the summer, DiamondRock Hospitality signed on to purchase four hotels for $495 million from affiliates of Blackstone Real Estate Partners VI.
“With property operations on the upswing, investors continue to comb the market for opportunities,” per the recently released Marcus & Millichap report. “In general, it remains less expensive to purchase a hotel than build a new one, a factor that will continue to sustain an active investment market in the months ahead.”