Wednesday, December 11, 2024
Summit Hotel Properties, in collaboration with GIC through their joint venture, has revealed plans to acquire two properties: the 250-room Hampton Inn Boston – Logan Airport and the 149-room Hilton Garden Inn Tysons Corner. The total purchase price for these acquisitions is $96 million, averaging approximately $241,000 per room. The deal represents an 8.8% capitalization rate based on projected 2024 net operating income, with no major capital expenditures expected until the fourth quarter of 2026.
“We are excited to announce the pending acquisition of the Hampton Inn Boston – Logan Airport and Hilton Garden Inn Tysons Corner through our joint venture with GIC. 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. The purchase price represents an attractive going-in yield and a significant discount to estimated replacement cost,” said Jonathan P. Stanner, the Company’s President and Chief Executive Officer. “The transaction represents the continuation of our successful capital allocation strategy and has been facilitated by recent asset sales which generated nearly $150 million of proceeds and eliminated approximately $50 million of near-term capital expenditures,” continued Mr. Stanner.
Hampton Inn Boston – Logan Airport
Located just 2.5 miles from Boston Logan International Airport and less than a 10-minute drive from Downtown Boston, the Hampton Inn Boston – Logan Airport is perfectly positioned to cater to a diverse mix of travelers. Boston, known for its vibrant corporate, group, education, healthcare, and leisure sectors, is among the most robust lodging markets in the U.S.
In 2023, Boston Logan International Airport served over 40 million passengers and is currently undergoing a $2 billion modernization project to accommodate growing travel demand. This multi-year investment will likely enhance the hotel’s future performance.
The Hampton Inn Boston – Logan Airport features 250 guestrooms and a 368-space surface-level parking lot, part of which is leased to a third-party parking operator. This arrangement provides the hotel with a durable and significant ancillary revenue stream, further strengthening its financial outlook.
Hilton Garden Inn Tysons Corner
The Hilton Garden Inn Tysons Corner is located in Vienna, Virginia, within Fairfax County, just 11 miles west of Washington, D.C. It is the closest Hilton-branded select-service property to Hilton’s world headquarters. Tysons Corner is a prominent business district in Virginia, hosting five Fortune 500 companies and one of the largest shopping and mixed-use developments in the U.S.—Tysons Corner Center. The area boasts annual visitation spending of $2.4 billion and a compounded annual employment growth rate of 14% since 2010.
The hotel’s strategic location and proximity to significant corporate and retail hubs make it an attractive investment, positioning it to capitalize on the steady influx of business and leisure travelers.
Financing and Transaction Details
The acquisition will be financed through a combination of cash on hand and a $50 million term loan secured by exercising a portion of the accordion option on the GIC joint venture’s existing $200 million credit facility. The loan will carry an interest rate of SOFR + 210 basis points and has a fully extended maturity date of September 2028.
Summit’s estimated $24 million equity contribution for its 51% stake in the transaction will primarily come from the net proceeds of its recent sale of the Four Points by Sheraton San Francisco Airport, as well as cash reserves. This leverage-neutral approach ensures that the transaction aligns with the company’s broader financial strategy.
The transaction, valued at $96 million, is expected to close in the fourth quarter of 2024, though Summit notes there are no assurances that the deal will be finalized on the proposed terms or timeline.
Strategic Growth and Market Positioning
With these acquisitions, Summit Hotel Properties continues to strengthen its portfolio with strategically located assets in high-demand markets. The Hampton Inn Boston – Logan Airport and the Hilton Garden Inn Tysons Corner not only provide attractive in-place yields but also align with the company’s vision of driving long-term value for shareholders through strategic investments.
These acquisitions mark another step forward in Summit’s growth trajectory, capitalizing on opportunities in two of the nation’s most dynamic markets.
