In order to expand its footprints in La.,
Summit Hotel Properties, Inc. (
recently penned a deal with
Marriott International, Inc. (
to acquire a portfolio of five La.-based hotels of the company
for $135 million. The deal is expected to be closed in the first
quarter of this year, subject to customary closing conditions.
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Summit Hotel intends to spend around $5.0 million for renovations
of the La. portfolio over the coming twelve months.
Post-renovation, the company expects to generate EBITDA (Earnings
before Interest, Taxes, Depreciation and Amortization) multiple
for the portfolio in the range of 10.5x to 11.5x over the next 12
months, based on the current EBITDA estimate.
The abovementioned portfolio, which comprises 5 hotels having a
total of 823 rooms, includes Courtyard by Marriott and Residence
Inn by Marriott in Metairie, Courtyard by Marriott and
SpringHills Suites by Marriott near the New Orleans Convention
Center as well as Courtyard by Marriott near the French Quarter.
Summit Hotel plans to ink deals with affiliates of Marriott to
operate all these hotels.
The hotels are located in close proximity to important business
centers of the state and will allow the company to have access to
several diverse markets and sub-markets in the area. We expect
the strategic location of the properties to be a major revenue
driver for the company and this will likely boost its top-line
growth as well. Notably, Summit Hotel has four properties in La.
- Double Tree, Fairfield Inn & Suites, SpringHill Suites and
The aforesaid acquisition also depicts Summit Hotel's robust
expansion strategy, which it is diligently following since the
last few quarters. The company's noteworthy buyouts include the
purchase of three hotels in Utah, N.Y. and Fla. for $71.8 million
and the acquisition of a portfolio of three Hyatt hotels located
in Fla. and Ill. for $36.1 million.
Summit Hotel, a real estate investment trust (REIT), acquires and
owns premium-branded hotels in the upscale and upper mid-scale
segments of the lodging industry. As of Jan 28, 2013, the
company's portfolio comprised 86 hotels located across 21 states.
Summit Hotel currently holds a Zacks Rank #4 (Sell). Two of
DiamondRock Hospitality Co. (
Brandywine Realty Trust (
, are performing impressively and are currently holding Zacks
Rank #1 (Strong Buy) and Rank #2 (Buy), respectively.