Summit Hotel Properties has signed definitive contribution and purchase agreement to acquire a 27-hotel portfolio, two parking structures and several financial incentives for $822m, from affiliates of NewcrestImage.
This acquisition will be done by Summit Hotel Properties through its current joint venture with GIC.
Of the total $822m consideration, $776.5m is for the 27-hotel portfolio, $24.8m for the two parking structures and $20.7m for the several financial incentives.
Summit Hotel Properties expects to fund its 51% equity contribution for the deal through a mix of common and preferred operating partnership units. GIC’s 49% equity contribution of $208m will come as cash.
It also expects to enter into management agreements with Aimbridge Hospitality for the 27 hotels.
The firm expects the deal to be immediately accretive to earnings.
Summit Hotel Properties president and CEO Jonathan P. Stanner said: “We are thrilled to announce this transformational investment opportunity for the acquisition of 27 hotels that are complementary to our existing portfolio of high-quality, well-located assets and significantly expands our presence in high-growth Sun Belt markets.
“We have creatively structured the transaction with the issuance of both common and preferred operating partnership units and continued our partnership with GIC, which will preserve nearly all our existing liquidity of approximately $450 million.”
NewcrestImage managing partner and CEO Mehul Patel said: “We at NewcrestImage are extremely honored and proud to craft this transaction with the outstanding team at Summit Hotel Properties. NewcrestImage has assembled a collection of high-quality distinctive Marriott, Hilton, Hyatt, and IHG hotel properties throughout the Sun Belt region, which will be a great addition to Summit’s portfolio.”
The 27-hotel portfolio has a total of 3,709 guestrooms.
According to Summit Hotel Properties, the newer assets with Marriott, Hilton, Hyatt and IHG brand affiliations are complementary to its existing hotel portfolio.
This deal will boost Summit Hotel Properties’ total room count by almost 35% to more than 15,000 keys across 100 hotels in 42 markets of the US.
Out of the total portfolio of 100 hotels, 61 will be completely owned by Summit Hotel Properties.
Summit Hotel Properties has received a $410m financing commitment from Bank of America and Wells Fargo Bank that will serve as the primary debt financing for the deal.
Subject to customary closing conditions, the deal is expected to close late in Q4 2021 or early in Q1 2022.