NewcrestImage has reached a definitive agreement to purchase 45 hotels from a private investment firm. Terms of the transaction were not disclosed.
The portfolio totals approximately 3,300 rooms and includes 35 Marriott-branded, seven Hilton-branded, two Choice-branded and one Radisson-branded property, which are located in 11 states—Arkansas, Colorado, Illinois, Iowa, Kansas, Michigan, Minnesota, North Dakota, Ohio, South Dakota and Texas.
“It’s a really exciting time for our company,” Mehul Patel, managing partner/CEO, NewcrestImage, told Hotel Business. “It’s a game-changing transaction. This is the largest transaction the company has ever [made], purchasing 45 hotels in one chunk… It’s a rare opportunity that you get a chance to acquire 45 hotels. We’re really fortunate that we have the balance sheet and experience to pull off something like purchasing a large portfolio in today’s environment.”
Patel said that the “current financial environment makes it very attractive to buy rather than build, and this group of fine hotels in high-traffic locations provides us with an exceptional opportunity to immediately start generating significant revenue, profit and return on investment.”
While 45 properties have been sold, he said that many of them are dual-branded. “It is a very iconic portfolio,” he said. “All of the markets are different. They are not relying on one source of business. There are various demand factors.
The hotels are located in mostly suburban markets which rely on leisure travel, including reunions, sports and other visits. The markets also attract small business meetings and other smaller business activities.
This transaction comes during what has been a year of transition for NewcrestImage, beginning in January with the sale of 27 hotels totaling 3,533 guestrooms to Summit Hotel Properties. Since then, the company has focused on creating a growth-centered portfolio with transactions to acquire 15 hotels.
“We love the lodging space,” said Patel. “We always loved it. That’s why we have bought and sold 250 hotels over the years and built 80 hotels. We are doubling down in this timeframe because of the inflation rise, but, more importantly, the lodging space has come back faster than everybody thought…especially in the suburban area. Corporate business is coming back. It is trickling in very slowly, but it is coming back very nicely when you look at the entire U.S.”
He added that travelers are combining business and leisure travel together, which made these properties attractive. “That is what we have seen in this entire portfolio,” he said. “The revenue has come back [from] pre-pandemic roughly 95%. So when you look at it, you’re back to 2019 numbers on the entire portfolio. That is a remarkable recovery when you look at the entire lodging space.”
Patel reported that the company is not done making transactions. “We have become a powerhouse investment shop as this transaction shows our confidence in the lodging space,” he said. “We’re really eager to invest more in the lodging space and continue to do more investment in the space.”
Two law firms—Akin Gump Strauss Hauer & Feld, along with Munsch Hardt Kopf & Harr—served as legal advisors to NewcrestImage for the latest 45-hotel transaction.