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June 3, 2014

American Realty Capital to acquire Equity Inns for $1.925bn

American Realty Capital Hospitality Trust (ARC Hospitality) has agreed to acquire Equity Inns lodging portfolio from subsidiaries of W2007 Grace I and WNT Holdings, for $1.925bn.

American Realty Capital Hospitality Trust (ARC Hospitality) has agreed to acquire the Equity Inns lodging portfolio from subsidiaries of W2007 Grace I and WNT Holdings, for $1.925bn.

Equity Inns operates 126 hotels totalling 14,934 rooms across 35 US states.

The portfolio is franchised by global hotel brands including Hilton Hotels & Resorts, Marriott International, Hyatt Hotels and InterContinental Hotels Group under a number of hotel flags, including Hampton Inn, Hilton garden Inn, Homewood Suites, Embassy Suites, Courtyard, Residence Inn, Hyatt Place and Holiday Inn.

Upon completion of the deal, ARC Hospitality’s lodging portfolio will increase to 132 hotels totalling 16,115 rooms.

ARC Hospitality chairman Nicholas Schorsch said that the acquisition is a transformational event for ARC Hospitality.

"We believe this acquisition catapults ARC Hospitality into a position of leadership within the hospitality industry, becoming a top-tier player in the select-service lodging REIT sector and providing us a strong foundation for further expansion."

"We believe this acquisition catapults ARC Hospitality into a position of leadership within the hospitality industry, becoming a top-tier player in the select-service lodging REIT sector and providing us a strong foundation for further expansion."

"We further believe that now is an opportune time to acquire well-located, high-quality hotels in the upscale and upper midscale tiers as the lodging cycle continues its recovery and enters what we expect will be an extended upward trajectory," Schorsch added.

Commenting on the Equity Inns portfolio, ARC Hospitality chief investment officer Jonathan Mehlman said: "These assets are located primarily in top 100 MSA, high barrier-to-entry markets with diverse demand drivers that will provide sustained growth and value creation opportunities."

The transaction, subject to customary franchisor and lender approvals as well as other usual closing conditions, is expected to close in the fourth quarter of 2014.

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