Avoiding the end-of-year fog that plagues so many, Summit Hotel Properties Inc. kept busy in late December and wrapped up a few acquisitions before 2012 came to a close. The lodging REIT completed the purchase of three hotels in two transactions totaling $71.8 million, thereby adding 438 guestrooms to its portfolio.
(Picture: Garden City, N.Y.)
Summit acquired two of the assets, Hampton Inn & Suites in Tampa, Fla., and Hyatt Place on Long Island in Garden City, N.Y., from OTO Development L.L.C. The 138-room Hampton Inn, purchased for $20.8 million, will be upgraded via a $2 million capital investment. Hyatt Place, picked up for $31 million, becomes the REIT’s only asset in the State of New York. The 122-room hotel will be freshened up with $305,000 in improvements.
On the other side of the country, in Utah, Summit bought Residence Inn by Marriott Salt Lake City-City Center from Third West Lodging Associates L.C. for $20 million, including the assumption of 14.1 million of existing debt. Featuring 178 guestrooms, the property will benefit from $6.5 million in upgrades. Summit plans to roll out the renovation programs at the hotels within the next 18 months, financing the projects through cash on hand or borrowings under its senior secured revolving credit facility.
The three hotel purchases, as asset management and private equity firm Robert W. Baird & Co. observes in a new research note, mark a move in Summit’s ongoing program of match-funding capital raises with accretive, high-quality acquisitions; the REIT completed a $75 million preferred equity raise in December.
“They are ‘middle of the fairway’ deals–high-yielding, high-growth properties with strong brands in top markets,” David Loeb, senior research analyst with RW Baird, told Commercial Property Executive. “Management deployed proceeds from its recent capital raise quickly, which is a positive and a testament to the company’s strong pipeline and ability to close deals quickly. We expect more of the same in 2013.”