Summit Hotel Properties Forms JV with Singapore's GIC
Summit Hotel Properties has entered into a joint venture with GIC, Singapore's sovereign wealth fund, to acquire assets that align with the company's current investment strategy and criteria.
AUSTIN, TX—Summit Hotel Properties has entered into a joint venture with GIC, Singapore’s sovereign wealth fund, to acquire US hotel assets. The locally-based company will serve as general partner and asset manager of the joint venture, investing 51% of the equity capitalization with GIC investing the remaining 49%.
The joint venture’s assets will be financed at 50% leverage.
An affiliate of the joint venture is currently under contract to acquire the 88-guestroom Hampton Inn & Suites located in Silverthorne, CO for $25.5 million. It is also under contract to acquire two adjacent contiguous land parcels totaling 1.3 acres for $2.4 million, with an eye on potential future development.
The hotel, which is near popular ski destinations including Keystone, Breckenridge, Copper Mountain and Arapahoe Basin, benefits from strong, year-round leisure demand and a local corporate base.
Opened in December 2015, the hotel will require minimal initial capital investment. It had trailing 12-month RevPAR of $153 and hotel earnings before interest, taxes, depreciation and amortization margin of 45.1% for the period ended June 30, 2019.
Summit Hotel estimates a capitalization rate of 8.3% based on management’s current estimate of the hotel’s forward 12-month net operating income and expects the hotel to generate $0.8 million of earnings before interest, taxes, depreciation and amortization from the scheduled acquisition date through the remainder of 2019.
The joint venture expects to close the transactions concurrently during the third quarter.