Dallas-based hotel developer NewcrestImage will transfer its existing hotel management agreement rights to Plano, Texas-based, third-party hotel management giant Aimbridge Hospitality, acquire a minority ownership stake in Aimbridge, and start to work together to identify growth opportunities.
At the same time, Summit Hotel Properties has completed an initial closing of the previously announced portfolio acquisition through its existing joint venture with GIC from affiliates of NewcrestImage. The initial closing included 26 of the 27 hotels totaling 3,533 guestrooms, two parking structures, and various financial incentives. The remaining hotel to be acquired is the currently under construction 176-guestroom Canopy by Hilton New Orleans which is nearing completion.
The total consideration for the Summit-NewcrestImage transaction is comprised of US$776.5 million, or US$209,000 per key, for the 27-hotel portfolio, US$24.8 million for the two parking structures, and US$20.7 million for the various financial incentives. The transaction is expected to be immediately accretive to Summit’s adjusted FFO per share, generate a stabilized net operating income yield of 8% to 8.5%, including future capital investment and excluding any ancillary joint venture fees earned by Summit, and be leverage neutral to the company’s balance sheet while preserving existing liquidity of nearly US$450 million.
Back to the NewcrestImage-Aimbridge deal, NewcrestImage will develop and acquire new hotel assets and Aimbridge will act as operator. In addition, Mehul Patel will join the newly formed Aimbridge Hospitality CEO Advisory Board.
“We are excited to grow with NewcrestImage as they develop new properties with Aimbridge as their strategic operating partner,” said Mike Deitemeyer, Aimbridge Hospitality president and CEO. “I look forward to working closely on growth opportunities with Mehul Patel and his team at NewcrestImage, who have built one of our industry’s most respected hotel portfolios.”
“Each of these transactions is important and impressive on its own,” said Mehul Patel, chairman and CEO of NewcrestImage. “This is a collaboration that will enable both companies to gain unmatched momentum and growth.”