USD | Summit Hotel Properties has announced its pending acquisition of the Two-Hotel portfolio for USD $96 million through a joint venture.
Summit Hotel Properties, Inc., through its joint venture with GIC, has announced that it is under contract to acquire the 250-guestroom Hampton Inn Boston - Logan Airport and the 149-guestroom Hilton Garden Inn Tysons Corner for a combined purchase price of USD $96.0 million, or USD $241,000 per key. The purchase price represents an 8.8 percent capitalisation rate based on forecasted 2024 net operating income, and no meaningful capital expenditures are planned prior to the fourth quarter of 2026.
"We are excited to announce the pending acquisition of the Hampton Inn Boston - Logan Airport and Hilton Garden Inn Tysons Corner through our joint venture with GIC. These two premium-branded hotels are located in high barrier-to-entry, gateway city submarkets and generate RevPAR, EBITDA margin and EBITDA per key metrics that are accretive to our existing portfolio of high-quality hotels. The purchase price represents an attractive going-in yield and a significant discount to estimated replacement cost," said Jonathan P. Stanner, Summit Hotel Properties President and Chief Executive Officer.
"The transaction represents the continuation of our successful capital allocation strategy and has been facilitated by recent asset sales which generated nearly USD $150 million of proceeds and eliminated approximately USD $50 million of near-term capital expenditures," continued Stanner.
The Hampton Inn Boston – Logan Airport is located just 2.5 miles from the Boston Logan International Airport and less than a 10-minute drive to Downtown Boston. Boston's diverse demand drivers, including corporate, group, education, healthcare, and leisure demand, make it one of the strongest lodging performance and investment markets in the U.S. The Boston Logan International Airport served more than 40 million passengers in 2023 and is currently undergoing a multi-year modernisation investment project totalling USD $2 billion to accommodate increasing travel demand in and out of the region that will further benefit the hotel going forward. The hotel features a 368-space surface-level parking lot, a portion of which is leased to a third-party parking operator, creating a durable and meaningful ancillary revenue source for the hotel.
The Hilton Garden Inn Tysons Corner is situated in the affluent city of Vienna, Virginia, in Fairfax County, just 11 miles west of downtown Washington, D.C., and is the closest Hilton-branded select service hotel to Hilton world headquarters. Tysons Corner is one of Virginia's principal business districts and home to five Fortune 500 companies. In addition to its preeminent office market, Tysons is home to the Tysons Corner Center, one of the largest shopping centres and mixed-use developments in the U.S., with annual visitation spending of USD $2.4 billion and a strong employment CAGR of 14 percent since 2010.
The transaction is expected to be financed with a mix of cash on hand and a USD $50 million term loan raised in conjunction with exercising a portion of the accordion option on the GIC joint venture's existing USD $200 million credit facility. The term loan will have an interest rate of SOFR + 210 basis points, and a fully extended maturity date of September 2028. The Company's estimated USD $24 million of required equity for its 51 percent share of the transaction will be funded primarily from the net sale proceeds from the recently completed sale of the Four Points by Sheraton San Francisco Airport as well as cash on hand. Combined with the attractive in-place yield of the acquisition, the recently completed sale results in a leverage-neutral transaction. The transaction is expected to close in the fourth quarter of 2024, and the Company makes no assurances that the transaction will be completed on the agreed-upon terms or at all.
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