AUSTIN – Summit Hotel Properties paid $53 million to purchase the 16-story Hampton Inn & Suites in downtown Austin.
The 209-room Hampton was developed in 2002 by Doyle A. Graham Jr., President and CEO of the Houston-based Valencia Group hotel organization.
The Austin Hampton, 200 San Jacinto Blvd,, is believed to be the tallest Hampton Inn in the chain, which is part of Hilton.
Summit Hotel Properties, an Austin-based REIT, owns 91 hotels with 12,000 rooms in 21 states. The Hampton is Summit’s first hotel in Austin, which is one of the hottest hotel markets in the nation.
Austin is by far the strongest hotel market in Texas with a citywide room rates and an average occupancy rate of 75 percent. The only city to come close to Austin is Houston, with a 69 percent occupancy rate, but other major Texas cities are far behind Austin.
The 16-story Hampton Inn & Suites is located in downtown Austin, Texas, one block from the Austin Convention Center and Lady Bird Lake, in the central business district. Austin has seen continued increases in demand from large corporate accounts, convention business and strong leisure demand. The capitol city is home to the headquarters or regional offices of many Fortune 500 companies, including Apple Inc., eBay, Google, IBM, Texas Instruments, Whole Foods and Dell.
Summit anticipates spending $2.4 million in capital improvements over the next twelve months. The company estimates a post-renovation next twelve month (“NTM”) capitalization rate in the range of 8.00 percent to 8.50 percent based on management’s current projection of future net operating income. Summit expects the hotel to generate approximately $1.4 million of adjusted earnings before interest, taxes, depreciation and amortization (“EBITDA”) through the balance of 2014.
“We are thrilled with the acquisition of our first property in the robust and dynamic Austin market,” said Summit President and CEO Dan Hansen. “The Hampton Inn & Suites is a wonderful addition to our portfolio in one of the fastest growing cities in the country.”