Home Hotel industry Summit Hotel Properties Completes Acquisition of NewcrestImage Portfolio | Texas

Summit Hotel Properties Completes Acquisition of NewcrestImage Portfolio | Texas

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AUSTIN, TX, January 13, 2022 /PRNewswire/ — Summit Hotel Properties, Inc. (NYSE: INN) (the “Company” or “Summit”) announced today that it has completed the initial closing of the previously announced portfolio acquisition through of its existing joint venture with GIC from its NewcrestImage subsidiaries. The initial closure included 26 of 27 hotels totaling 3,533 rooms, two parking lots and various financial incentives. The remaining hotel to be acquired is the 176-room Canopy currently under construction by Hilton New Orleans which is nearing completion, and the joint venture expects to complete the acquisition of the hotel during the first quarter of 2022 (collectively with the initial closing referred to as the “Transaction”).

The total consideration for the transaction is made up of $776.5 million, Where $209,000 by key, for the portfolio of 27 hotels, $24.8 million for both parking structures, and $20.7 million for the various financial incentives. The transaction is expected to be immediately accretive to adjusted FFO per share, deliver a stabilized net operating income return of 8.0% to 8.5%, including future capital investments and excluding joint venture fees accessories collected by Summit, and have a neutral leverage effect on the balance of the company. balance sheet while preserving existing liquidity closely $450 million.

Capital structure and financing

Upon closing of the Transaction, the Company will fund its 51% capital contribution with a combination of common operating partnership units and preferred operating partnership units. The Company will issue 15.865 million Joint Operating Partnership Units worth $160 million to Affiliate Sellers, based on VWAP over 10 days of $10.0853 per unit from November 2, 2021. The Company will also issue $50 million value in newly designated 5.25% Series Z Preferred Units. Preferred Operating Partnership Units will be entitled to distributions at the rate of 5.25% per annum, may be redeemed by the holder on 10and or 11and anniversary of the issue date and may be called by the Company at any time after the 5and anniversary of the date of issue. The capital contribution of 49% of GIC will be in the form of cash.

The Company obtained a $410 million financing commitment from Bank of America and Wells Fargo Bank, which will provide the primary debt financing for the Transaction. The term loan has an initial term of four years with an option to extend for one year, subject to certain conditions. The loan is interest only and provides a variable interest rate equal to SOFR + 2.86%.

List of portfolio assets

PROPERTY NAME

MSA

STATE

KEYS /

THE SPACES

YEAR

BUILT

AC by Marriott Houston Downtown Hotel

Houston

TX

195

2019

AC by Marriott Oklahoma City Bricktown Hotel

Oklahoma City

Okay

142

2017

AC Hotel by Marriott Dallas Downtown

dallas

TX

128

2017

Residence Inn by Marriott Dallas Downtown

dallas

TX

121

2017

AC by Marriott Frisco Station Hotel

dallas

TX

150

2019

Residence Inn by Marriott Frisco Station

dallas

TX

150

2019

Canopy near Hilton Frisco Station

dallas

TX

150

2020

Canopy by Hilton New Orleans (1)

New Orleans

THE

176

2021

Courtyard by Marriott Amarillo Downtown

Amarillo

TX

107

2010

Courtyard by Marriott Grapevine

dallas

TX

181

2013

TownePlace Suites by Marriott Grapevine

dallas

TX

120

2013

Embassy Suites by Hilton Amarillo Downtown

Amarillo

TX

226

2017

Hampton Inn & Suites by Hilton Dallas Downtown

dallas

TX

176

2016

Hilton Garden Inn near Hilton College Station

Bryan-College Stn

TX

119

2013

Hilton Garden Inn by Hilton Longview

Long-term vision

TX

122

2015

Hilton Garden Inn by Hilton Grapevine

dallas

TX

152

2021

Holiday Inn Express & Suites Grapevine

dallas

TX

95

2000

Holiday Inn Express & Suites Oklahoma City Bricktown

Oklahoma City

Okay

124

2015

Homewood Suites by Hilton Midland

Midland-Odessa

TX

118

2014

Hyatt Place Dallas Grapevine

dallas

TX

125

2000

Hyatt Place Dallas Plano

dallas

TX

127

1998

Hyatt Place Lubbock

Lubbock

TX

125

2016

Hyatt Place Oklahoma City Bricktown

Oklahoma City

Okay

134

2018

Residence Inn by Marriott Tyler

Tyler

TX

119

2014

SpringHill Suites by Marriott Dallas Downtown

dallas

TX

148

1997

SpringHill Suites by Marriott New Orleans

New Orleans

THE

74

2018

TownePlace Suites by Marriott New Orleans

New Orleans

THE

105

2018

Total hotel portfolio

3,709

Dallas parking structure

dallas

TX

335

2019

Frisco parking lot

dallas

TX

667

2019

Total parking

1,002

Total NIC Portfolio

3,709 / 1,002

(1) Canopy by Hilton New Orleans is still under construction and is expected to open and acquire in the first quarter of 2022.

COMPONENTS OF TRANSACTION VALUE (in thousands of dollars)

VALUE

BY KEY

Hotel portfolio

27 Hotels / 3,709 Rooms

$776,500

$209

parking structures

2 Structures / 1,002 Parking Spaces

24,800

Total

$801,300

Financial motivations (1)

20,700

Total

$822,000

(1) The value of financial incentives reflects the net present value of expected future cash flows.

Composition of the Board

Effective January 13, 2022, Mehul Patel, managing partner and chief executive of NewcrestImage, has been appointed as a director to the company’s board.

Advisors

BofA Securities, Inc. is acting as financial advisor and Hunter Andrews Kurth is acting as legal counsel to the Company in connection with the Transaction. Goodwin Procter, Munsch Hardt Kopf & Harr, Haynes and Boone and Colven & Tran act as legal advisors to NewcrestImage.

About Summit Hotel Properties

Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused on owning premium branded hotels with efficient operating models primarily in the upscale segment of the hotel industry. accommodation. As of January 13, 2022, the Company’s portfolio consisted of 100 hotels, 61 of which are wholly owned, with a total of 15,051 rooms located in 24 states. When the canopy closes by Hilton New Orleans, the Company’s portfolio will consist of 101 hotels, 61 of which will be wholly owned, with a total of 15,227 rooms located in 24 states.

About NewcrestImage

NewcrestImage has become one of America’s leading hotel companies, having brokered over 184 hotels throughout its history. It is known and respected for its unique properties and for repeatedly developing bold, award-winning projects that have transformed the hospitality industry. Most notable properties include dual-brand hotels, adaptive reuse of historic buildings, and a “lifestyle hotel campus,” which creates vibrant mixed-use neighborhoods.

Forward-looking statements

This press release contains statements that are “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by the use of forward-looking terminology such as “may”, “will”, “should”, “potential”, ” intends”, “expects”, “seeks”, “anticipates”, “estimates”, “approximately”, “believes”, “could”, “projects”, “predicts”, “plans”, “continue”, “plan”, “likely”, “would” or other similar words or expressions. Forward-looking statements are based on certain assumptions and may include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Examples include forward-looking statements: the Company’s ability to achieve financial and operational synergies; income and expense projections or other financial items; descriptions of the Company’s plans or objectives for future operations; EBITDAre forecasts; and descriptions of the assumptions underlying or relating to any of the foregoing expectations about when they will occur. These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company’s control, which could cause actual results to differ materially from these statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hospitality industry, and other factors described in more detail in Company filings. with the Securities and Exchange Commission (“SEC”). Except as required by law, the Company disclaims any obligation to update forward-looking statements, whether as a result of new information, future events or otherwise.

For more information on the Company’s business and financial results, please refer to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and “Risk Factors” sections of the Company’s Annual Report. Company on Form 10-K for the fiscal year ended December 31, 2020, filed with the SEC, and its quarterly filings and other periodic filings with the SEC. The Company undertakes no obligation to update the statements contained in this press release to conform them to actual results or to changes in the Company’s expectations.

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SOURCE Summit Hotel Properties, Inc.

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