Summit Hotel Properties, Inc. (NYSE: INN) announced today that on June 9, 2017, it completed the acquisition of the 181-guestroom Courtyard by Marriott Charlotte City Center for a total purchase price of $56.3 million and entered into a management agreement with OTO Development, LLC.
"The acquisition of the Courtyard by Marriott Charlotte City Center represents a continuation of our capital allocation strategy by acquiring an exceptionally well-located hotel in a strong market, funded partially through the recycling of capital from the sale of a non-core asset. This marks our entrance into the Charlotte market, which has been one of the more dynamic hotel markets over the past three years and boasted the highest office employment growth in the country over the last twelve months," said Chairman, President and Chief Executive Officer, Daniel P. Hansen. "Since our equity raise last month, we have now closed or signed contracts to purchase over $300 million in high-quality, premium-branded hotels that have significant upside and meet our investment criteria," commented Mr. Hansen.
The Company estimates a capitalization rate of 8.3 percent based on management's current estimate of the hotel's net operating income during the first year of ownership. The Company estimates that the hotel will contribute approximately $2.7 million of earnings before interest, taxes, depreciation and amortization ("EBITDA") for the remainder of 2017. For the twelve months ended March 31, 2017, the Hotel had revenue per available room ("RevPAR") of $129 and delivered an EBITDA margin of 54.7 percent, which compares favorably to the Company's total portfolio RevPAR and hotel EBITDA margin of $114 and 37.8 percent, respectively, for the comparable period.
The Hotel's guestrooms and public space were recently renovated, and the Company plans to invest approximately $0.8 million into redesigning the bar and Bistro area that will enhance the guest experience.
Located in the heart of Charlotte's uptown financial and entertainment district, the Hotel is ideal for both business and leisure travelers. The Hotel offers interior access to the Bank of America corporate headquarters, is situated across the street from Wells Fargo's east coast operations headquarters and located just blocks from the Charlotte Convention Center, NASCAR Hall of Fame, EpiCentre, Bechtler Museum of Modern Art, and Harvey Gantt Center. Other nearby attractions include Spectrum Arena, home of the NBA's Charlotte Hornets, Bank of America Stadium, home of the NFL's Carolina Panthers, and Charlotte Motor Speedway, in addition to an array of museums and cultural attractions.
In addition, on June 2, 2017, the Company completed the sale of the 90-guestroom Courtyard El Paso Airport located in El Paso, Texasfor $11.2 million. The hotel was sold to a buyer unaffiliated with Hospitality Investors Trust, Inc. (formerly known as American Realty Capital Hospitality Trust, Inc.) and completes the Company's previously announced transaction to sell 26 hotels.
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