ARC Hospitality closes on $1.8B acquisition.
American Realty Capital Hospitality Trust, Inc. announced that it has completed the previously announced acquisition of the Equity Inns Lodging Portfolio ("Equity Inns" or the "Portfolio") from affiliates of the Whitehall Real Estate Funds sponsored by Goldman Sachs. The total purchase price was $1.8 billion, exclusive of closing costs.
The Portfolio consists of 116 hotels totaling 13,744 rooms across 31 states, all franchised by Hilton Hotels & Resorts, Marriott International, Hyatt Hotels and Inter-Continental Hotels Group. The hotels include leading brands such as Hampton Inn, Hilton Garden Inn, Homewood Suites, Embassy Suites, Courtyard, Residence Inn, Hyatt Place and Holiday Inn.
The acquisition of the Portfolio increases ARC Hospitality's lodging portfolio to 122 hotels totaling 14,925 rooms, establishing ARC Hospitality as one of the largest owners of select-service hotels in the North American lodging REIT sector.
"We are delighted to announce the acquisition of the Equity Inns portfolio, which represents a transformational event for ARC Hospitality," commented William M. Kahane, Chairman of ARC Hospitality. "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."
"The Equity Inns purchase marks the largest acquisition in the history of the non-traded REIT industry, and propels ARC Hospitality into a leadership position among select-service lodging REITs in North America," said Jonathan P. Mehlman, President and Chief Executive Officer of ARC Hospitality. "Our diligence on this transaction began nearly one year ago. Since then, we have seen positive upward trends in the Portfolio's operating results, exceeding our initial underwriting expectations. We believe the combination of an improving economy, our ability to purchase hotels with stable occupancies at a discount to replacement cost, as reflected by this transaction, and our cultivated relationship with our management company partners has created a solid platform for ARC Hospitality to drive shareholder value."
Edward T. Hoganson, Chief Financial Officer of ARC Hospitality, added, "The Equity Inns portfolio has a majority of properties located in the top 100 MSAs and premier locations in their respective markets, and we believe it exhibits strong top- and bottomline growth fundamentals.