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ARC Hospitality buys 13 hotels

American Realty Capital Hospitality Trust announced Tuesday it has agreed to acquire a portfolio of 13 hotels for US$300 million from affiliates of private equity developer Noble Investment Group.

The Noble portfolio consists of 12 premium-branded select-service and extended-stay hotels and one full-service hotel, totaling 1,913 rooms. The hotels are franchised by major global brands including Hyatt Hotels, Hilton Hotels & Resorts and Marriott International.

The acquisitions, when completed, will increase ARC Hospitality’s lodging portfolio to 166 hotels totaling 20,193 rooms across 34 states. Approximately 95% of the company’s pro forma portfolio will be branded by Hilton, Marriott or Hyatt.

“We believe these assets, when acquired, will be in the upper echelon of our portfolio, and we expect these hotels to lead our RevPAR growth across the company,” said Jonathan Mehlman, CEO of ARC Hospitality. “We are excited that, assuming all recently announced transactions are completed, our aggregate portfolio will represent a competitive unlevered yield in the mid-7% range based on trailing 12-month net operating income as of May 2015 at an attractive basis, which we believe is well below replacement cost. This speaks to our disciplined approach of creating a best-in-class portfolio that maximizes long-term shareholder value.”

Edward Hoganson, CFO of ARC Hospitality, added, “We believe there is considerable upside opportunity with the hotels due to recent renovations and our ability to combine operations in markets where we own other assets.”

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