Summit Hotel Properties Announces Pending Acquisition of Residence Inn by Marriott Steamboat Springs

Rhea-AI Summary

Summit Hotel Properties (NYSE: INN) has announced a definitive agreement to acquire the new Residence Inn by Marriott Steamboat Springs for $33 million, through a joint venture with GIC. The property, opened in December 2020, is strategically located near major attractions, making it well-positioned for strong demand, particularly during winter and summer seasons. The acquisition is expected to be funded with $17 million of cash on hand, leaving the company with over $425 million in liquidity for future investments.

Positive

• Acquisition of a strategically located hotel expected to capture strong demand.
• RevPAR premium of over 30% compared to competitive set in initial months of operation.
• Increased demand due to planned $135 million in capital improvements at Steamboat Resort.

Negative

• Acquisition funding relies on available cash, potentially limiting other investment opportunities.

AUSTIN, Texas, June 7, 2021 /PRNewswire/ -- Summit Hotel Properties, Inc. (NYSE: INN) (the "Company") today announced that it has entered into a definitive agreement to acquire the 110-guestroom Residence Inn by Marriott Steamboat Springs for $33.0 million through its joint venture with GIC.  Opened in December 2020, the newly built Residence Inn by Marriott Steamboat Springs is ideally located in close proximity to the base of Mount Werner and Gondola Square, biking and hiking trails, downtown Steamboat Springs, restaurants, shopping, and numerous other attractions.

The hotel is well-positioned to capture strong winter ski demand and summer leisure demand in what has been an extremely high barrier-to-entry market as only six other hotels have opened in the last 20 years, and there are none in any stage of development.  In addition to robust peak winter and summer demand, the hotel is also expected to benefit from recurring special corporate and project business that will help balance demand patterns, particularly during shoulder seasons.  As the newest hotel in Steamboat Springs and first Marriott-branded extended-stay hotel in the market, the hotel has been able to achieve a significant RevPAR premium of more than 30% compared to its competitive set in the first six months of operation.

Steamboat Springs Expansion

As a participant in the Ikon Pass ski program, Steamboat is one of the top five busiest ski resorts in the United States, hosting more than one million skier visits per year and is poised for meaningful growth in part driven by the significant capital investment planned to improve the mountain.  Alterra Mountain Company is the current owner and operator of Steamboat Resort and acquired the mountain in 2017 with a goal of increasing airlift, enhancing summer demand, and building out the mountain base.  In April 2021, Alterra announced updated plans to spend $135 million on base area improvements, ski acreage expansion and enhancement of the overall guest experience.  Phase 1 of the improvement plan is currently underway which includes gondola upgrades that will improve skier circulation and enhance the overall guest experience by reducing ski lift wait times.  In addition, the project investment will increase skiable terrain by approximately 20% to more than 3,600 acres, making Steamboat the second largest skiable area in Colorado. The project is expected to be completed by the start of the 2022/23 winter season.

The Steamboat market is serviced by the Yampa Valley Regional Airport which has recently seen incoming seats increase by 20% and continues to service flights from 15 airports in major markets across the country.

Acquisition Funding and Timing

The Company expects to fund its 51% interest in the joint venture acquisition using approximately $17 million of cash on-hand.  After completion of the transaction, the Company expects to have over $425 million of total liquidity and over $150 million of current investment capacity permitted under recent credit facility amendments to pursue future investment opportunities. The transaction is expected to be completed late in the second quarter or early in the third quarter and remains subject to customary closing conditions.

About Summit Hotel Properties

Summit Hotel Properties, Inc. is a publicly traded real estate investment trust focused on owning premium-branded hotels with efficient operating models primarily in the Upscale segment of the lodging industry.  As of June 7, 2021, the Company's portfolio consisted of 72 hotels, 61 of which are wholly owned, with a total of 11,288 guestrooms located in 23 states.

For additional information, please visit the Company's website, www.shpreit.com, and follow on Twitter at @SummitHotel_INN.

Forward-Looking Statements

This press release contains statements that are "forward-looking statements" within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "seek," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict," "forecast," "continue," "plan," "likely," "would" or other similar words or expressions. Forward-looking statements are based on certain assumptions and can include future expectations, future plans and strategies, financial and operating projections or other forward-looking information. Examples of forward-looking statements include the following: the Company's ability to realize financial and operational synergies; projections of revenues and expenses or other financial items; descriptions of the Company's plans or objectives for future operations; forecasts of EBITDAre; and descriptions of assumptions underlying or relating to any of the foregoing expectations regarding the timing of their occurrence. These forward-looking statements are subject to various risks and uncertainties, not all of which are known to the Company and many of which are beyond the Company's control, which could cause actual results to differ materially from such statements. These risks and uncertainties include, but are not limited to, the state of the U.S. economy, supply and demand in the hotel industry, and other factors as are described in greater detail in the Company's filings with the Securities and Exchange Commission ("SEC"). Unless legally required, the Company disclaims any obligation to update any forward-looking statements, whether as a result of new information, future events, or otherwise.

For information about the Company's business and financial results, please refer to the "Management's Discussion and Analysis of Financial Condition and Results of Operations" and "Risk Factors" sections of the Company's Annual Report on Form 10-K for the year ended December 31, 2020, filed with the SEC, and its quarterly and other periodic filings with the SEC. The Company undertakes no duty to update the statements in this release to conform the statements to actual results or changes in the Company's expectations.

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SOURCE Summit Hotel Properties, Inc.

FAQ

What is Summit Hotel Properties acquiring?

Summit Hotel Properties is acquiring the Residence Inn by Marriott Steamboat Springs for $33 million.

How will Summit fund the acquisition of the Residence Inn?

The acquisition will be funded using approximately $17 million of cash on hand.

What is the expected completion date for the acquisition of the Residence Inn?

The transaction is expected to be completed late in the second quarter or early in the third quarter of 2021.

What demand factors support the acquisition of the Residence Inn?

The hotel is expected to benefit from strong winter ski demand, summer leisure demand, and special corporate business.

What recent improvements are being made at Steamboat Resort?

Steamboat Resort plans to invest $135 million in improvements, including gondola upgrades and expansion of skiable terrain.