WASHINGTON, DC–A 812-key, five-asset hotel portfolio has traded hands for $163 million, or $201,000 per key. Orlando, Fla.-based Summit Hotel Properties has acquired the portfolio from Xenia Hotel & Resorts in Austin, Texas. The purchase price represents an 11.1x multiple on the hotels' combined trailing twelve month EBITDA as of April 2017. The portfolio achieved RevPAR of $115.52 during the same period.
Two of the hotels are located in Baltimore; the other three are in Ft. Worth, Kansas City and Pittsburgh.
They are: the 203-unit Courtyard Fort Worth Downtown/Blackstone, the 123-unit Courtyard Kansas City Country Club Plaza, the Courtyard Pittsburgh Downtown, which has 182 keys, Hampton Inn & Suites Baltimore Inner Harbor, with 116 rooms and the 188-guestroom Residence Inn Baltimore Downtown/Inner Harbor. “All five of these hotels are located in prime locations in strong markets and exhibit many of the upside characteristics that are important to our investment criteria,” Summit CEO Daniel Hansen says in a prepared statement.
Recycling Capital
Summit will be executing new franchise agreements with the respective franchisors for the hotels. It also expects to spend approximately $13 to $16 million in capital improvements required under these agreements over the next two years.
As for Xenia, it has been selling off its Washington DC area properties for the last year as part of its capital recycling program.
Last week it announced it had acquired the 815-key Hyatt Regency Grand Cypress in Orlando, for $205.5 million, or approximately $252,000 per key. Summit, for its part, acquired two hotels in Phoenix, Ariz. and Aliso Viejo, Calif., for a total of $60.2 million during the first quarter. It too is recycling assets, having sold the Hyatt Place Atlanta North, near the airport, for $14.5 million during the quarter.
Increased Activity
This portfolio sale follows Canadian REIT American Hotel Income Propertie's acquisition of an 18-asset hotel portfolio in the Mid-Atlantic and northeast for $407.4 million, or $186,000 per key last month. There were several Baltimore area hotels in that portfolio as well.
Read Canadian REIT Buys Eastern Seaboard Hotel Portfolio for $407M
One reason for the stepped up activity may be that the hotel market has peaked, at least according to Fitch Ratings' first quarter 2017 outlook for the asset class.
It reports that US RevPAR is up 3.4%, while occupancy ended Q1 up 0.5% versus the prior year and is expected to flatten out and possibly decrease slightly later in 2017. Fitch expects US RevPAR growth to decelerate to 1% to 2% during 2017.
WASHINGTON, DC–A 812-key, five-asset hotel portfolio has traded hands for $163 million, or $201,000 per key. Orlando, Fla.-based Summit Hotel Properties has acquired the portfolio from Xenia Hotel & Resorts in Austin, Texas. The purchase price represents an 11.1x multiple on the hotels' combined trailing twelve month EBITDA as of April 2017. The portfolio achieved RevPAR of $115.52 during the same period.
Two of the hotels are located in Baltimore; the other three are in Ft. Worth, Kansas City and Pittsburgh.
They are: the 203-unit Courtyard Fort Worth Downtown/Blackstone, the 123-unit Courtyard Kansas City Country Club Plaza, the Courtyard Pittsburgh Downtown, which has 182 keys, Hampton Inn & Suites Baltimore Inner Harbor, with 116 rooms and the 188-guestroom Residence Inn Baltimore Downtown/Inner Harbor. “All five of these hotels are located in prime locations in strong markets and exhibit many of the upside characteristics that are important to our investment criteria,” Summit CEO Daniel Hansen says in a prepared statement.
Recycling Capital
Summit will be executing new franchise agreements with the respective franchisors for the hotels. It also expects to spend approximately $13 to $16 million in capital improvements required under these agreements over the next two years.
As for Xenia, it has been selling off its Washington DC area properties for the last year as part of its capital recycling program.
Last week it announced it had acquired the 815-key Hyatt Regency Grand Cypress in Orlando, for $205.5 million, or approximately $252,000 per key. Summit, for its part, acquired two hotels in Phoenix, Ariz. and Aliso Viejo, Calif., for a total of $60.2 million during the first quarter. It too is recycling assets, having sold the Hyatt Place Atlanta North, near the airport, for $14.5 million during the quarter.
Increased Activity
This portfolio sale follows Canadian REIT American Hotel Income Propertie's acquisition of an 18-asset hotel portfolio in the Mid-Atlantic and northeast for $407.4 million, or $186,000 per key last month. There were several Baltimore area hotels in that portfolio as well.
Read Canadian REIT Buys Eastern Seaboard Hotel Portfolio for $407M
One reason for the stepped up activity may be that the hotel market has peaked, at least according to Fitch Ratings' first quarter 2017 outlook for the asset class.
It reports that US RevPAR is up 3.4%, while occupancy ended Q1 up 0.5% versus the prior year and is expected to flatten out and possibly decrease slightly later in 2017. Fitch expects US RevPAR growth to decelerate to 1% to 2% during 2017.
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Erika Morphy
Erika Morphy has been writing about commercial real estate at GlobeSt.com for more than ten years, covering the capital markets, the Mid-Atlantic region and national topics. She's a nerd so favorite examples of the former include accounting standards, Basel III and what Congress is brewing.
