Summit Hotel Properties has closed on the acquisition of two of the four hotels previously announced as part of the Company's 12 September, 2013 offering of common stock.
The Company also announced the disposition of three hotels and the successful execution of the Company's new USD300 million senior unsecured credit facility.
The Company has closed on two of the three previously announced Southern California hotels. The two hotels have a total of 223-guestrooms and are both unencumbered by debt.
The Company acquired the 115-guestroom Hampton Inn & Suites located in Ventura (Camarillo), CA for USD15.8 million. The hotel was built in 2004 and the Company anticipates spending approximately USD1.3 million in capital improvements over the next 12 months. The Company anticipates a post-renovation estimated NTM capitalization rate in the range of 8.5 per cent to 9.25 per cent based on management's current estimate of net operating income.
The Hampton Inn & Suites in Ventura (Camarillo) provides access to several large corporate demand generators including Verizon and Lockheed Martin. In addition, the hotel offers significant leisure demand generators with Southern California's hottest attractions within easy driving distance: Universal Studios, Disneyland(R), Hollywood, Beverly Hills, the scenic Pacific Coast Highway and Malibu's pristine beaches.
The Company also acquired the 108-guestroom Hampton Inn & Suites located in San Diego (Poway), CA for USD15.2 million. The hotel was built in 2008 and the Company anticipates spending approximately USD0.3 million on capital improvements over the next 12 months. The Company anticipates a post-renovation estimated NTM capitalization rate in the range of 8.5 per cent to 9.25 per cent based on management's current estimate of net operating income.
The Hampton Inn & Suites in San Diego (Poway) provides both strong weekday business demand and weekend leisure demand. The Poway Business Park has grown consistently since its inception in 2007 and continued expansion is expected. Located just minutes north of San Diego, the hotel also provides strong leisure demand from attractions such as the USS Midway Museum, SeaWorld(R), Petco(R) Park, Qualcomm(R) Stadium, San Diego Zoo and LEGOLAND(R) California.
The Company announced that during the third quarter, it closed on the dispositions of the 78-guestroom SpringHill Suites located in Lithia Springs, GA, the 71-guestroom Fairfield Inn located in Lewisville, TX and the 63-guestroom Fairfield Inn located in Lakewood, CO. The Company sold the three hotels for a total sale price of USD7.2 million.
"We continue to be focused on creating shareholder value through acquisition of premium select service hotels with strong growth profiles. In addition, the continued disposition of hotels we no longer see as strategic keeps our portfolio's quality and growth profile aligned with our strategy of having the best premium select service brands in the best markets nationwide," said Company President and CEO Dan Hansen.
On 10 October, 2013, the Company completed a new USD300 million senior unsecured credit facility to replace its USD150 million senior secured revolving credit facility. The unsecured credit facility is comprised of a USD225 million revolving credit facility and a USD75 million term loan. In addition to moving to an unsecured structure and increasing the maximum size of the facility, the company was able to lower the interest rate spread on outstanding borowings and extend the term of the maturity by two and a half years to October 10, 2017. The credit facility has an accordion feature which will allow the Company to increase the capacity by USD100 million in either additional revolver capacity or an additional term loan. Deutsche Bank AG New York Branch is the administrative agent and Deutsche Bank Securities Inc. is the lead manager. The syndication of lenders includes Deutsche Bank AG; Bank of America, NA; Royal Bank of Canada; Key Bank National Association; Regions Bank; Fifth Third Bank; Raymond James Bank, NA; and US Bank National Association.
"We are very satisfied with the completion of our unsecured credit facility," says Company Executive Vice President and Chief Financial Officer Stuart Becker. "We continue to see opportunities to acquire additional strategic hotels. Thus, expanding our financing capacity with a more flexible unsecured credit facility, while reducing our financing costs, is very positive for our company."