Summit Hotel JV to Snap up Steamboat Springs Hotel For $33M
Summit Hotel Properties (INN) has agreed to acquire Residence Inn from Marriott Steamboat Springs for $33 million. Summit is acquiring the 110 room property through its joint venture with GIC.
Summit plans to fund its 51% stake in the acquisition with about $17 million cash on hand. Following the acquisition, Summit expects to have total liquidity of $425 million. The acquisition is expected to close in late Q2 or early Q3.
Residence Inn, opened in December 2020, is located near the base of Mount Werner and key tourist attractions. The hotel is strategically positioned to capture both winter skiing and summer leisure demand.
Significantly, in the first six months of operating, the hotel has already achieved over 30% RevPAR premium versus its peers in the region. (See Summit Hotel stock analysis on TipRanks)
Robert W. Baird analyst Michael Bellisario recently reiterated a Buy rating on the stock and a $12 price target (18.9% upside potential).
During Summit’s Q1 earnings call, Bellisario asked how the company was planning to balance the share of the JV versus its fully owned portfolio.
Summit’s President and CEO Jonathan Stanner answered that the JV contributes 11 of Summit’s total 72 assets, which is a small portion of its portfolio. Stanner added that there is still room for its contribution to grow, but it will not become the majority of Summit’s assets.
Based on 3 unanimous Buys, consensus among analysts is a Strong Buy. The Summit Hotel average analyst price target of $12 implies 18.9% potential upside.
Shares have gained about 17.3% so far this year.
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