Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today announced that it has entered into a definitive agreement to acquire a portfolio of five Louisiana hotels (the “Louisiana portfolio”) containing an aggregate of 823 rooms for a purchase price of approximately $135.0 million. The Company expects to implement approximately $5.0 million in property improvements to the Louisiana portfolio over the next twelve months. The Company anticipates a post-renovation estimated NTM EBITDA multiple for the Louisiana portfolio in the range of 10.5x to 11.5x based on management’s current estimate of EBITDA.
The Company expects to complete the acquisition in the first quarter of 2013. The acquisition is subject to satisfactory completion of the Company’s due diligence and satisfaction of customary closing conditions, and the Company can give no assurance that the acquisition will be consummated. The Company intends to enter into agreements with affiliates of Marriott to operate each hotel.
“This portfolio of hotels is uniquely positioned to allow us access to the many diverse markets and sub-markets in the area,” said Company President and CEO Dan Hansen. “They are each great properties on their own and we would be happy to own any one of them. We are very excited to have the opportunity to acquire all five of them.”
The Company plans to acquire the 153-room Courtyard by Marriott and the 120-room Residence Inn by Marriott, both located in Metairie, LA. Metairie is the first suburb of New Orleans and is the halfway point between downtown New Orleans, home of the world-famous French Quarter, Superdome, Aquarium, Zoo, and Convention Center; and Kenner, where the New Orleans International Airport, Rivertown, and the Pontchartrain Center are located. Metairie is an important business hub for the New Orleans area, and home to major businesses including Ochsner Hospital, US Department of Defense, ATF, and DEA, as well as Entergy, Jacobs Engineering, Tetra Tech, Skanska, URS, Westinghouse, Verizon, PF Changs, and AT&T.
New Orleans Convention Center
The Company plans to acquire the 202-room Courtyard by Marriott and the 208-room SpringHill Suites by Marriott, both located just two blocks from the freshly renovated New Orleans Ernest N. Morial Convention Center. A jam-packed convention calendar in 2012, including large citywide events such as the BCS Championship Game and NCAA Men’s Final Four helped boost demand. The city is also enjoying the continued demand recovery following the 2005 landfall of Hurricane Katrina. The New Orleans Convention and Visitors Bureau has a healthy pipeline of large conventions to help fill the expanding Convention Center which is nearing the completion of its $50 million “Great Hall” expansion, designed to attract small to mid-size corporate events.
The Company plans to acquire the 140-room Courtyard by Marriott in downtown New Orleans. This hotel’s premier location on St. Charles Avenue is within short walking distance to the French Quarter as well as many financial and corporate offices. Some of the key corporate offices include GE, Whitney Hancock, Xavier University, LSU Medical, Miller/Coors, AT&T, Verizon, Glazers, Moet/Hennesey, as well as the US Department of Justice and Homeland Security.
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 January 28, 2013, the Company’s portfolio consisted of 86 hotels with a total of 9,383 rooms located in 21 states.