US-based Summit Hotel Properties has entered into definitive agreements to acquire four hotels totaling 652 guestrooms for an aggregate purchase price of $164m.
The deal will see Summit buy the 207-guestroom Courtyard New Haven at Yale, the 148-guestroom Hilton Garden Inn Boston/Waltham, the 175-guestroom Residence Inn Cleveland Downtown, and the 122-guestroom Homewood Suites by Hilton Tucson/St. Philip's Plaza University.
According to Summit, the aggregate purchase price represents a 12.1x multiple on the hotels' combined trailing twelve-month EBITDA as of September this year, and the portfolio achieved RevPAR of $124 during that same period.
Summit Hotel Properties chairman, president and chief executive officer Daniel Hansen said: "We are thrilled with the opportunity to acquire this portfolio of four exceptionally well-located hotels where we see considerable long-term value.
"All four hotels are located in strong markets, three of which are new for Summit and further enhance our geographic diversification. The properties are clear market leaders as the portfolio achieved an average RevPAR index of 122.3 for the twelve-month period ended September 2017.
"The off-market transaction will bring our year-to-date acquisition activity to nearly $600m as we continue to grow our portfolio with a prudent capital allocation strategy focused on acquiring premium-branded upscale hotels with efficient operating models while maintaining a geographically diversified portfolio."
Based on management's current estimate of the hotel's net operating income next year, the company estimates a capitalisation rate, including planned capital expenditures, of 7.8%.
In conjunction with the anticipated acquisitions, the company will enter into new franchise agreements with the respective franchisors for the hotels and expects to spend around $7m to $9m in capital improvements over the next two years.
Subject to the satisfaction of certain customary closing conditions, the deal is expected to close before the end of this month.