NEW YORK CITY—American Realty Capital Hospitality Trust Inc. said Friday it had completed its previously announced acquisition of the Equity Inns Lodging Portfolio from affiliates of the Whitehall Real Estate Funds sponsored by Goldman Sachs. Reportedly the largest acquisition to date by a non-traded REIT, the deal closed on schedule under the revised timetable set out by ARC Hospitality this past November.

At that time, the portfolio was amended from what was originally 126 properties selling for $1.925 billion to 116 trading for $1.8 billion. The deal nonetheless increases ARC Hospitality's portfolio by nearly 20-fold, and establishes the REIT as one of the largest owners in the select-service space domestically, with a total of 122 properties and 14,925 keys.

Of that total, the newly acquired portfolio accounts for 13,744 rooms across 31 states, all franchised by Hilton Hotels & Resorts, Marriott International, Hyatt Hotels and InterContinental Hotels Group. The properties fly flags that include Hampton Inn, Hilton Garden Inn, Homewood Suites, Embassy Suites, Courtyard, Residence Inn, Hyatt Place and Holiday Inn.

William Kahane, ARC Hospitality's chairman, calls the acquisition “a transformational event” for the company. “In our opinion, Equity Inns offers compelling value among recently marketed and comparable select-service portfolios from the standpoint of both price per key, as well as on a yield basis. This nationwide portfolio of high-quality, stabilized hotels with strong brand affiliations, geographic diversification and healthy growth dynamics, supports our strategy of providing consistent distributions and the potential for capital appreciation to our investors.”

When the deal was first announced last June, then-chairman Nicholas Schorsch said the select-service hotel segment represented “tremendous value given the economic recovery in the US, higher profit margins and reduced operational risks characteristic of these assets. We further believe that now is an opportune time to acquire well-located, high-quality hotels in the upscale and upper midscale tiers as the lodging cycle continues its recovery and enters what we expect will be an extended upward trajectory.”

In connection with the acquisition, ARC Hospitality assumed $903.9 million of debt, collateralized by 96 of the 116 properties. Simultaneously with the closing, ARC Hospitality obtained $227 million of first mortgage financing for the remaining 20 properties. The sellers—subsidiaries of W2007 Grace I LLC and WNT Holdings LLC—will retain a preferred equity interest of $447.1 million that carries no prepayment restrictions or penalties. ARC Hospitality funded the remaining $230.1 million with cash-on-hand from proceeds of the offering of its common stock.

RCS Capital, the investment banking and capital markets division of Realty Capital Securities LLC, a subsidiary of RCS Capital Corp., acted as financial advisor to ARC Hospitality. RCAP is under common control with the parent of the sponsor of ARC Hospitality. Goldman Sachs and Deutsche Bank Securities Inc. acted as financial advisors to the sellers. Goodwin Procter LLP and Proskauer Rose LLP acted as legal advisors to ARC Hospitality, with Sullivan & Cromwell LLP providing legal counsel to the sellers.