Capital recycling continues with sale of the Courtyard El Paso airport for $11.2 million
Austin, Texas/PRNewswire/ -- Summit Hotel Properties, Inc. announced that it completed the acquisition of the 181-guestroom Courtyard by Marriott Charlotte City Center for a total purchase price of $56.3 million and entered into a management agreement with OTO Development, LLC, on June 9.
"The acquisition of the Courtyard by Marriott Charlotte City Center represents a continuation of our capital allocation strategy by acquiring an exceptionally well-located hotel in a strong market, funded partially through the recycling of capital from the sale of a non-core asset. This marks our entrance into the Charlotte market, which has been one of the more dynamic hotel markets over the past three years and boasted the highest office employment growth in the country over the last twelve months," said chairman, president and chief executive officer, Daniel P. Hansen. "Since our equity raise last month, we have now closed or signed contracts to purchase over $300 million in high-quality, premium-branded hotels that have significant upside and meet our investment criteria," added Hansen.
The company estimates a capitalization rate of 8.3 percent based on management's current estimate of the hotel's net operating income during the first year of ownership.
The company estimates that the hotel will contribute approximately $2.7 million of earnings before interest, taxes, depreciation and amortization ("EBITDA") for the remainder of 2017. For the twelve months ended March 31, 2017, the hotel had RevPAR of $129 and delivered an EBITDA margin of 54.7 percent, which compares favorably to the company's total portfolio RevPAR and hotel EBITDA margin of $114 and 37.8 percent, respectively, for the comparable period.
The hotel's guestrooms and public space were recently renovated, and the company plans to invest approximately $0.8 million into redesigning the bar and Bistro area that will enhance the guest experience.
Located in the heart of Charlotte's uptown financial and entertainment district, the hotel is ideal for both business and leisure travelers.
In addition, on June 2, 2017, the company completed the sale of the 90-guestroom Courtyard El Paso Airport located in El Paso, Texas for $11.2 million. The hotel was sold to a buyer unaffiliated with Hospitality Investors Trust, Inc. (formerly known as American Realty Capital Hospitality Trust, Inc.) and completes the company's previously announced transaction to sell 26 hotels.
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