Summit Hotel Properties (NYSE:INN) (“the Company”) today announced several recent developments.
The Company has entered into agreements to acquire the properties described below. The completion of these acquisitions is anticipated during the second quarter of 2012. These transactions are subject to lender approval and satisfactory completion of due diligence and other customary closing conditions.
- A 112-room Hilton Garden Inn property in Nashville (Smyrna), TN for a purchase price of $12.0 million including planned property improvements. The Company anticipates a post-renovation, estimated NTM capitalization rate in the range of 8 to 9 percent.
- An 83-room Hampton Inn & Suites property in Nashville (Smyrna), TN for a purchase price of $8.5 million including planned property improvements. The Company anticipates a post-renovation, estimated NTM capitalization rate in the range of 9 to 10 percent.
“The opportunity for acquisitions like these continues to be robust,” said Dan Hansen, Company president and CEO. “We continue to build our portfolio with the best brands in the best markets at great cap rates.”
Portfolio cultivated through strategic dispositions
The long-standing strategy of the Company and its predecessor, Summit Hotel Properties, LLC, has been to continuously cultivate and improve the portfolio through acquisitions as detailed above, as well as strategic dispositions. In keeping with this strategy the Company has entered into contracts to sell four properties. Details on the properties and terms of sale will be disclosed as the transactions reach certainty of closure. “These dispositions go hand in hand with our acquisitions as we are always seeking to improve our portfolio and add value for our investors,” said Hansen. “These sales, if completed, will give us greater flexibility and access to near-term capital without the need to issue additional equity at this time.”
Resolution of Arbitration with Choice Hotels
An arbitration panel has issued an award in the Company’s dispute with Choice Hotels International, Inc. (“Choice”). In March 2011, Choice terminated the franchise agreements of ten of the Company’s hotels with an additional hotel being terminated in June 2011. On April 4, 2012, an arbitration panel determined, among other things, that Choice improperly terminated the 11 franchise agreements, that Choice is not entitled to recover liquidated damages in connection with the 11 hotels and that the Company did not make any materially false or misleading statements to Choice or omit any material information. The panel awarded the Company damages in amount of $298,090 as full settlement of all claims submitted in the arbitration. Neither the Company nor Choice is entitled to recover attorney’s fees in connection with the matter.