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$1.9 Billion Deal Creates One of the Largest U.S. Hospitality Real Estate Investments Trusts

Jun 02, 2014 10:30 am

Skift Take

The deal is a sign and symptom of the rebounding hospitality sector.

— Samantha Shankman

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The welcome sign at the Holiday Inn. Phalinn Ooi / Flickr


American Realty Capital Hospitality Trust Inc. agreed to pay $1.93 billion for a group of hotels that’s indirectly owned by funds managed by Goldman Sachs Group Inc., creating one of the biggest hospitality-focused real estate investment trusts in the U.S.

The company is buying 126 hotels in 35 states operated by brands including Holiday Inn, Hilton Garden Inn and Hyatt Place, the New York-based company said in a statement today. The properties, known as the Equity Inn portfolio, are the largest ever acquisition by ARC Hospitality.

Three of the five largest U.S.-based global hotel operators have raised revenue forecasts for the year as the strengthening global economy has boosted demand for hotels. ARC Hospitality’s purchase gives it access to hotels that offer limited food and beverage services to customers.

“The select-service hotel segment offers tremendous value given the economic recovery in the U.S., higher profit margins and reduced operational risks,” ARC Hospitality Chairman Nicholas Schorsch said in the statement. “Now is an opportune time to acquire well-located, high-quality hotels in the upscale and upper midscale tiers.”

The deal is expected to close in the fourth quarter, according to the statement. Realty Capital Securities LLC advised ARC Hospitality while Goldman Sachs and Deutsche Bank AG advised the sellers. The two banks will provide financing to ARC Hospitality in connection with the purchase.

To contact the reporter on this story: Neil Callanan in London at ncallanan@bloomberg.net To contact the editors responsible for this story: Andrew Blackman at ablackman@bloomberg.net Jeffrey St.Onge.

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