Summit acquires two hotels for $96M through JV

AUSTIN, Texas — Austin, Texas-based REIT Summit Hotel Properties, through its joint venture with Singapore-based sovereign wealth fund GIC, has acquired two properties in Boston and suburban Washington, D.C., for $96 million.

The properties are the 250-key Hampton Inn Boston - Logan Airport and the 149-key Hilton Garden Inn Tysons Corner in Vienna, Virginia, for a combined purchase price of $96 million, or $241,000 per key. The purchase price represents an 8.8% capitalization rate based on forecasted 2024 net operating income and no meaningful capital expenditures are planned prior to the fourth quarter of 2026.

“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,” said Summit Hotel Properties President and CEO Joseph Stanner. “The purchase price represents an attractive going-in yield and a significant discount to estimated replacement cost.”

Stanner said the transaction was facilitated by recent asset sales, which generated nearly $150 million in proceeds and eliminated approximately $50 million in near-term capital expenditures.

Summit’s estimated $24 million of required equity for its 51% 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.

The new transaction is expected to close in this last quarter of 2024 and is expected to be financed with a mix of cash on hand and a $50 million term loan raised in conjunction with exercising a portion of the accordion option on the GIC joint venture’s existing $200 million credit facility. The term loan will have an interest rate of SOFR plus 210 basis points and a fully extended maturity date of September 2028.

The Hampton Inn Boston – Logan Airport is located 2.5 miles from the Boston Logan International Airport and also features a 368-space surface-level parking lot, a portion of which is leased to a third-party parking operator, which creates an ancillary revenue source for the hotel. The Hilton Garden Inn Tysons Corner is situated in the affluent city of Vienna, Virginia, in Fairfax County.

Summit’s portfolio has 95 hotels, 53 of which are wholly owned, with 14,154 rooms located in 24 states.