GIC JV Buying Two US Hotels for $96M

The 250-key Hampton Inn Boston Logan Airport (Image: Hilton)

A joint venture of Singapore sovereign giant GIC and a NYSE-listed REIT has agreed to acquire a pair of US hotels for $96 million.

The two-asset portfolio consists of the 250-key Hampton Inn Boston Logan Airport in the Massachusetts capital and the 149-key Hilton Garden Inn Tysons Corner in Northern Virginia, GIC and Summit Hotel Properties said Tuesday in a release. The transaction is expected to close this month.

The combined purchase price translates to $241,000 per key and an 8.8 percent capitalisation rate based on forecast 2024 net operating income, the JV partners said. The seller’s identity wasn’t disclosed.

“The purchase price represents an attractive going-in yield and a significant discount to estimated replacement cost,” said Summit Hotel Properties president and CEO Jonathan P Stanner.

Gateway Submarkets
Located 2.5 miles (4 kilometres) from New England’s biggest airfield, Hampton Inn Boston Logan Airport features a 368-space surface-level parking lot, a portion of which is leased to a third-party parking operator to provide ancillary revenue to the hotel.

GIC chief executive Lim Chow Kiat

The hotel is expected to benefit from the ongoing $2 billion modernisation of Logan Airport, which served more than 40 million passengers in 2023, the JV partners said.

The Hilton Garden Inn Tysons Corner in Virginia’s Fairfax County sits 11 miles west of the nation’s capital in Washington DC. Tysons Corner is home to five Fortune 500 companies and Tysons Corner Center, the eighth-largest mall in the US.

“These two premium-branded hotels are located in high-barrier-to-entry, gateway city submarkets and generate RevPAR, EBITDA margin and EBITDA per key metrics that are accretive to our existing portfolio of high-quality hotels,” Stanner said.

Longtime Partnership
The 51:49 JV of Summit Hotel Properties and GIC plans to finance the deal with a combination of cash on hand and a $50 million term loan in conjunction with a portion of the accordion option on the partnership’s existing $200 million credit facility.

The $24 million in required equity for Summit’s share of the transaction will be funded by cash on hand and the proceeds from the Texas-based REIT manager’s recent $18 million sale of the Four Points by Sheraton San Francisco Airport.

The trust’s tie-up with the $801 billion Singaporean fund dates to 2019, when the JV acquired four hotels along the west coast of the US for $249 million as the first set of transactions under the venture. The 710-room portfolio consisted of two Residence Inn by Marriott hotels in Portland, Oregon and a pair of Hilton Garden Inns in California’s Bay Area.

In 2021, the JV purchased 27 hotels in Texas, Oklahoma and Louisiana, along with two parking structures, for a total consideration of $822 million. The 3,709-key portfolio consisted of newer-vintage hotels under brands managed by Marriott, Hilton, Hyatt and IHG.

The Summit Hotel Properties portfolio comprises 95 hotels (53 wholly owned) with a total of 14,154 rooms across 24 US states.