Summit Hotel Properties Sells Six Hotels for $135M

AUSTIN, TX—Locally-based hotel REIT Summit Hotel Properties, Inc. has sold six hotels, including two properties in Bloomington, MN by the Minneapolis St. Paul Airport for $135 million.

Summit reports that the six hotels traded will produce a net gain of $36.6 million. The six hotels in the markets of Minneapolis-St. Paul, Boston, Santa Barbara (CA), Dallas and Salt Lake City totaled 815 rooms. Summit Hotel Properties did not disclose the buyer of the properties.

The six hotels that were sold were: Hampton Inn Boston-Norwood (139 rooms), Hampton Inn Santa Barbara/Goleta (101 rooms), Hampton Inn & Suites Minneapolis St. Paul Airport-Mall of America (146 rooms), Hyatt Place Dallas Arlington (127 rooms), Residence Inn Salt Lake City Downtown (189 rooms) and the Spring Hill Suites by Marriott Minneapolis St. Paul Airport-Mall of America (113 rooms).

The aggregate gross sales price, plus estimated future capital improvements, represented a 12.8x EBITDA multiple and 6.9% capitalization rate for the trailing 12 months ended March 31, 2019.

The company estimates the hotels would have contributed approximately $9.5 million of EBITDAre (Earnings Before Interest, Taxes, Depreciation and Amortization for Real Estate) through the remainder of 2019. Net proceeds from the sale were used to reduce the outstanding balance of the company’s unsecured revolving credit facility, which now has $395.0 million available to borrow.

In February, Summit reported in its fourth quarter and full year 2018 financial results its net income attributable to common stockholders decreased to $71.0 million, or $0.68 per diluted share, compared with $79.2 million, or $0.79 per diluted share, in the same period of 2017.

Pro forma hotel EBITDA was $205.9 million, a decrease of 0.2% from the same period in 2017.The pro forma hotel EBITDA margin contracted by 81 basis points to 37.0% from 37.8% in the same period of 2017.  Excluding the effect of a 9.3% increase in property taxes, pro forma hotel EBITDA margin contracted by 29 basis points to 37.5%.

On Jan. 31, Summit acquired a fee-simple interest in the real estate at its Residence Inn by Marriott Baltimore Hunt Valley for a purchase price of $4.1 million. On Feb. 12,  the company completed the sale of the 66-guest room Holiday Inn Express and 64-guest room Country Inn & Suites located in Charleston, WV for an aggregate sales price of $11.6 million, which resulted in an estimated combined gain on sale of $4.1 million.

Last October, Summit Hotel Properties acquired the 150-room Residence Inn by Marriott Boston Watertown for $71 million or at approximately $473,000 per key. The hotel REIT also closed on the sale of the 148-room Hyatt Place Fort Myers/at the Forum in Fort Myers, FL for $16.5 million or at approximately $111,000 per key.

As of April 18, Summit’s portfolio consisted of 69 hotels with a total of 10,714 guest rooms located in 24 states.