AUSTIN, Texas, July 27, 2015 /PRNewswire/ -- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company") today announced that it completed the acquisition of two Residence Inn by Marriott hotels located in Baltimore (Hunt Valley), Md. and Branchburg, N.J. on July 24, 2015 for an aggregate purchase price of $56.8 million.
"We are very happy to announce the addition of these Residence Inn hotels to our portfolio. We remain very positive on the current state of the lodging cycle and see these two acquisitions as solid contributors to our long-term growth plan," said Daniel P. Hansen, President and Chief Executive Officer. "Both of these acquisitions are located in strong markets that fit well with our growth strategy and portfolio of premium select-service assets."
The Company acquired the 141-guestroom Residence Inn located in Baltimore (Hunt Valley), Md. for a total purchase price of $31.1 million and has entered into a management agreement with Interstate Hotels & Resorts. The Company plans to spend approximately $1.5 million on capital improvements at the property in 2016 and anticipates an estimated forward capitalization rate in the range of 8.0 percent to 8.5 percent based on management's current estimate of the hotel's 2016 net operating income. The Company currently estimates the hotel will contribute approximately $1.1 million of earnings before interest, taxes, depreciation and amortization ("EBITDA") through the balance of 2015.
Located just 18 miles from downtown Baltimore, the Hunt Valley Residence Inn is just one-tenth of a mile from the MTA Light Rail station that provides service to BWI International Airport, the Inner Harbor and home of the Baltimore Orioles, Camden Yards. It is surrounded by several large corporate and leisure demand generators making this hotel a great addition to the Company's portfolio. Major corporate accounts for the Residence Inn include PayPal, eBay, McCormick Spice Company, Men's Warehouse and Johns Hopkins University. Leisure demand is driven mainly through the proximity to the Maryland State Fairgrounds and the Pimlico Race Course, home of the Preakness Stakes.
The Company also acquired the 101-guestroom Residence Inn located in Branchburg, N.J. for a total purchase price of $25.7 million and entered into a management agreement with Interstate Hotels & Resorts. The Company plans to spend approximately $1.1 million on capital improvements in 2016 and anticipates an estimated forward capitalization rate in the range of 8.0 percent to 8.5 percent based on management's current estimate of the hotel's 2016 net operating income. The Company currently estimates the hotel to contribute approximately $1.0 million of EBITDA through the balance of 2015.
The Branchburg Residence Inn is located an hour outside of New York City in close proximity to several large pharmaceutical company headquarters, including Johnson & Johnson, Sanofi and Merck. The area's largest demand generator is Diamond Nation, one of the Hotel's largest accounts, which brings tens of thousands of baseball players to the area each year for tournaments and instructional camps.
The acquisitions were funded by advances on the Company's senior unsecured credit facility.
About Summit Hotel Properties Summit Hotel Properties, Inc. is a publicly-traded real estate investment trust focused primarily on acquiring and owning premium-branded, select-service hotels in the upscale and upper midscale segments of the lodging industry. As of July 27, 2015, the Company's portfolio consisted of 95 hotels with a total of 12,175 guestrooms located in 24 states.
For additional information, please visit the Company's website, www.shpreit.com.
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 the safe harbor provisions of the Private Securities Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," "forecast," "continue," "plan," "likely," "would" or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Examples of forward-looking statements include the following: the Company's ability to realize embedded growth from the deployment of renovation capital; projections of the Company's revenues and expenses, capital expenditures or other financial items; descriptions of the Company's plans or objectives for future operations, acquisitions, dispositions, financings or services; forecasts of the Company's future financial performance and potential increases in average daily rate, occupancy, RevPAR, room supply and demand, FFO and AFFO; the Company's outlook with respect to pro forma RevPAR, pro forma RevPAR growth, RevPAR, RevPAR growth, AFFO, AFFO per diluted unit and renovation capital deployed; and descriptions of assumptions underlying or relating to any of the foregoing expectations regarding the timing of their occurrence. 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 such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry and other factors as are described in greater detail in the Company's filings with the Securities and Exchange Commission ("SEC"). Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events or otherwise.
For information about 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 on Form 10-K for the year ended December 31, 2014 filed with the SEC, and its quarterly and other periodic filings with the SEC. The Company undertakes no duty to update the statements in this release to conform the statements to actual results or changes in the Company's expectations.
SOURCE Summit Hotel Properties, Inc.