Summit Hotel Properties Acquires Residence Inn Scottsdale North for $29 Million

AUSTIN, Texas, June 5, 2023— Summit Hotel Properties, Inc. (NYSE: INN) (the “Company”) today announced that it has completed the acquisition of the 120-guestroom Residence Inn Scottsdale North for $29.0 million through its joint venture with GIC. Additionally, the Company is providing an update on previously announced disposition activity.

Residence Inn Scottsdale North Acquired for $29.0 Million

On June 1, 2023, the Company completed the acquisition of the 120-guestroom Residence Inn Scottsdale North (“Hotel”) for $29.0 million through its joint venture with GIC.

Located in Phoenix’s high growth affluent North Scottsdale submarket among a multitude of leisure, corporate, and group demand generators, the Hotel is adjacent to TPC Scottsdale, the annual venue for the PGA Tour’s WM Open, hosting more than 700,000 attendees. Camelback Mountain and the McDowell Sonoran Preserve are within 20 minutes of the Hotel and offer numerous hiking and biking trails. In addition, the Hotel is within one mile of several high-end open-air shopping, dining and entertainment attractions including the Promenade Mall, Kierland Commons, and Scottsdale Quarter which collectively offer over one-hundred dining options.

The Hotel’s proximity to major employers, medical facilities, and the Scottsdale Airport and Airpark positions the Hotel to capture year-round corporate and group demand as well as a variety of training, medical, research, and other extended-stay business. Major employers in the area include Axon, Liberty Mutual, MassMutual, The Quantum Group, APL Logistics, Iron Mountain, Fender, P.F. Chang’s, Republic Services, Ameriprise Financial, Vanguard, Carlisle, US Bank, Prudential, Store Capital, BMO Harris Bank, Colony Starwood Homes, BOK Financial, and many others.

Additionally, the Hotel is located directly across North Scottsdale Road from the Company’s Courtyard and Springhill Suites hotels, both of which are also owned by the GIC joint venture. The addition of a third Marriott-branded hotel to the existing sales cluster will create revenue and operational synergies and the market-leading Residence Inn brand will allow the cluster to capture additional group and extended-stay opportunities.

The Company expects the Hotel to yield between an 8.0 percent and 8.5 percent capitalization rate on full year estimated 2023 net operating income. The Hotel was fully renovated in 2019 and requires minimal near-term capital expenditures. The Company funded its 51% interest in the joint venture acquisition using a portion of the net proceeds generated from the recently completed four-hotel portfolio sale.

Four-Hotel Portfolio Sale Completed For $28.1 Million

The Company completed the previously announced disposition of four wholly-owned hotels totaling 467 guestrooms for a gross sales price of $28.1 million. The portfolio of sold hotels included:

The transaction represents a 4.2 percent capitalization rate based on the aggregate net operating income of the hotels after a 4% FF&E reserve for the twelve months ended December 31, 2022. The Company will also forego comprehensive renovations that were estimated to be $21 million as a result of the sale. The aggregate gross sales price of $28.1 million, plus estimated future capital improvements, represents a 2.4 percent capitalization rate for the trailing twelve months ended December 31, 2022. Net proceeds from the sale were used to fund the Company’s 51% interest in the aforementioned Residence Inn Scottsdale North joint venture acquisition and reduce the outstanding balance of the Company’s unsecured revolving credit facility.

Pending Two-Hotel Portfolio Sale Contract Terminated

The Company also announced the termination of its previously announced agreement to dispose of two wholly-owned hotels totaling 283 guestrooms for a gross sales price of $50.5 million. The buyer utilized its option to terminate the non-binding agreement prior to the expiration of the due diligence period. The two hotels included: