Item 1.01. Entry into a Material Definitive Agreement.
The information regarding the Registration Rights Agreement, the Director
Nomination Agreement, the Tax Protection Agreement and the Credit Agreement set
forth under Item 2.01 of this Current Report on Form 8-K is hereby incorporated
by reference under this Item 1.01.
Item 2.01. Completion of Acquisition or Disposition of Assets.
Portfolio Acquisition
As previously disclosed in a Current Report on Form 8-K filed by Summit Hotel
Properties, Inc. (the "Company") on November 3, 2021, Summit Hotel OP, LP (the
"Operating Partnership"), the operating partnership of the Company, and Summit
Hospitality JV, LP, the Company's joint venture with GIC, Singapore's sovereign
wealth fund (the "Joint Venture"), entered into a Contribution and Purchase
Agreement (the "Contribution and Purchase Agreement") with NewcrestImage
Holdings, LLC, a Delaware limited liability company, and NewcrestImage Holdings
II, LLC, a Delaware limited liability company (together, "NewcrestImage"), to
purchase from NewcrestImage a portfolio of 27 hotel properties, containing an
aggregate of 3,709 guestrooms, and two parking structures, containing 1,002
spaces (such hotels and parking structures, the "Portfolio"), for an aggregate
purchase price of $822.0 million. Information about the properties included in
the Portfolio is set forth in the table below.
On January 13, 2022, the Operating Partnership and the Joint Venture completed
the acquisition of the Portfolio except for one hotel property, the
176-guestroom Canopy by Hilton New Orleans (the "Canopy New Orleans"), which is
still under construction, for an aggregate purchase price of $766.0 million (the
"Acquisition"), paid in the form of 15,314,494 common units of limited
partnership of the Operating Partnership ("Common Units"), 1,958,429 preferred
units of limited partnership of the Operating Partnership newly designated as
5.25% Series Z Cumulative Perpetual Preferred Units (Liquidation Preference $25
Per Unit) ("Series Z Preferred Units"), $382.0 million cash draw from a term
loan entered into by subsidiaries of the Joint Venture, the assumption by a
subsidiary of the Joint Venture of approximately $6.5 million in PACE loan debt
and approximately $174.1 million cash contributed by GIC, as a limited partner
in the Joint Venture. In connection with the Acquisition, GIC, as limited
partner in the Joint Venture, will contribute to the Joint Venture an estimated
additional $10.9 million cash, a portion of which will be distributed to the
Operating Partnership after transaction costs payable by the Operating
Partnership are deducted.
The Operating Partnership and the Joint Venture expect to acquire the Canopy New
Orleans upon completion of its construction, which is expected to occur during
the first quarter of 2022, for a purchase price of $56.0 million, to be paid in
the form of 550,180 Common Units, 41,571 Series Z Preferred Units, $21.4 million
cash and $28.0 million cash proceeds from a delayed draw on the Term Loan (as
defined below). There can be no assurance that this acquisition will be
completed on these terms or at all.
The following table sets forth certain information about the hotel properties
and the parking structures that comprise the Portfolio:
Keys/
Property Name MSA State Spaces Year Built
AC Hotel by Marriott Houston
Downtown Houston TX 195 2019
AC Hotel by Marriott Oklahoma
City Bricktown Oklahoma City OK 142 2017
AC Hotel by Marriott Dallas
Downtown Dallas TX 128 2017
Residence Inn by Marriott Dallas
Downtown Dallas TX 121 2017
AC Hotel by Marriott Frisco
Station Dallas TX 150 2019
Residence Inn by Marriott Frisco
Station Dallas TX 150 2019
Canopy by Hilton Frisco Station Dallas TX 150 2020
Canopy by Hilton New Orleans (1) New Orleans LA 176 2021
Courtyard by Marriott Amarillo
. . .
Item 2.03. Creation of a Direct Financial Obligation or an Obligation under an
Off-Balance Sheet Arrangement of a Registrant.
The information set forth under Item 2.01 as it relates to the Credit Agreement
is incorporated herein by reference.
Item 3.02. Unregistered Sales of Equity Securities.
In connection with the Acquisition, on January 13, 2022, the Operating
Partnership issued 15,314,494 Common Units, having a deemed valued of $10.0853
per unit, and 1,958,429 Series Z Preferred Units, having a deemed valued of
$25.00 per unit, in reliance in each case on the exemption from registration
provided by Section 4(a)(2) of the Securities Act of 1933, as amended.
Item 5.02. Departure of Directors or Certain Officers; Election of Directors;
Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On January 13, 2022, the Board, based on the recommendation of the Nominating
and Corporate Governance Committee of the Board, appointed Mehul "Mike" Patel as
a director of the Company, effective January 13, 2022. Mr. Patel was nominated
to serve on the Board pursuant to the Director Nomination Agreement described
under Item 2.01 of this Current Report on Form 8-K. In connection with
Mr. Patel's appointment, the size of the Board was increased from eight to nine.
The Board has determined that Mr. Patel is independent in accordance with the
applicable rules of the New York Stock Exchange. The Board has not yet
determined on which committees of the Board Mr. Patel will serve.
Mr. Patel will participate in the Company's non-employee director compensation
programs. The Company will enter into an indemnification agreement with
Mr. Patel in the form entered into with other directors and executive officers
of the Company.
Mr. Patel beneficially owns 16.7% of the membership interests of NewcrestImage
Holdings, LLC, which is the sole member of Bright Force Investment and 50.0% of
the membership interests of Sagestar Family.
Item 7.01. Regulation FD Disclosure.
On January 13, 2022, the Company issued a press release announcing the
Acquisition and the appointment of Mr. Patel to the Board.
A copy of the press release is furnished as Exhibit 99.1 to this Current Report
on Form 8-K.
Item 8.01. Other Events.
In connection with the Acquisition, Summit Hotel GP, LLC, a wholly owned
subsidiary of the Company and the sole general partner of the Operating
Partnership, on its own behalf as general partner of the Operating Partnership
and on behalf of the limited partners of the Operating Partnership, on
January 13, 2022, entered into the Tenth Amendment (the "Tenth Amendment") to
the First Amended and Restated Agreement of Limited Partnership of the Operating
Partnership, to provide for the issuance of up to 2,000,000 Series Z Preferred
Units. The Series Z Preferred Units rank on a parity with the Operating
Partnership's Series E and Series F Preferred Units and holders will receive
quarterly distributions at a rate of 5.25% per year. From issuance until the
tenth anniversary of their issuance, the Series Z Preferred Units will be
redeemable at the holder's request at any time, or in connection with a change
of control of the Company, for, at the Company's election, cash or shares of the
Company's 5.25% Series Z Cumulative Perpetual Preferred Stock (which will be
designated and authorized following notice of redemption by holder of the
Series Z Preferred Units) on a one-for-one basis. After the fifth anniversary of
their issuance, the Company may redeem the Preferred Units for cash. For a
90-day period immediately following both the tenth and the eleventh
anniversaries of their issuance or in connection with a change of control of the
Company, the Preferred Units will be redeemable at the holder's request for
cash.
This description of the Tenth Amendment is not complete and is qualified in its
entirety by reference to the copy of the Tenth Amendment filed as Exhibit 3.1 to
this Current Report on Form 8-K and hereby incorporated by reference herein.
Forward Looking Statements
This Current Report on Form 8-K contains statements that are
"forward-looking statements" within the meaning of the Private Securities
Litigation Reform Act of 1995 and other federal securities laws. These
forward-looking statements are based upon the Company's current expectations,
but these statements are not guaranteed to occur. Investors should not place
undue reliance upon forward-looking statements. These statements relate to,
among other things, the Company's pending acquisition of a hotel property from
NewcrestImage. No assurances can be given that the acquisition will be completed
when expected, on the terms described or at all. The forward-looking statements
are subject to various risks and uncertainties, many of which are beyond the
Company's control, including, without limitation, general economic conditions,
market conditions and other factors, including those set forth in the Risk
Factors section of the Company's periodic reports and other documents filed with
the SEC, including, without limitation, the Company's Annual Report on Form 10-K
for the year ended December 31, 2020. Unless legally required, the Company
disclaims any obligation to update any forward-looking statements, whether as a
result of new information, future events or otherwise. Copies are available on
the SEC's website, www.sec.gov. The Company undertakes no obligation to update
these statements after the date of this Current Report on Form 8-K.
Item 9.01. Financial Statements and Exhibits.
(a) Financial statements of businesses acquired
To the extent required by this item, audited historical combined financial
statements for the Portfolio will be filed in an amendment to this current
report on Form 8-K not later than 71 calendar days after the date on which this
initial Current Report on Form 8-K is required to be filed.
(b) Pro forma financial information
To the extent required by this item, pro forma financial information relating to
the acquisition of the Portfolio will be filed in an amendment to this current
report on Form 8-K not later than 71 days after the date on which this initial
Current Report on Form 8-K is required to be filed.
(d) Exhibits
Exhibit No. Description
3.1 Tenth Amendment to the First Amended and Restated Agreement of
Limited Partnership of Summit Hotel OP, LP, dated January 13, 2022.
10.1 Registration Rights Agreement, dated as of January 13, 2022, by and
among Summit Hotel Properties, Inc., Bright Force Investment, LLC,
Sagestar Family, LLC and C & D Family Holdings, LLC.
10.2 Director Nomination Agreement, dated as of January 13, 2022, by and
among Summit Hotel Properties, Inc., Bright Force Investment, LLC,
Sagestar Family, LLC and C&D Family Holdings, LLC.
10.3 Tax Protection Agreement, dated as of January 13, 2022, among
Summit Hotel OP, LP, NewcrestImage Holdings, LLC, Sagestar Family,
LLC and C&D Family Holdings, LLC.
10.4 $410 Million Credit Agreement, dated January 13, 2022, among Summit
JV MR 2, LLC, Summit JV MR 3, LLC and Summit NCI NOLA BR 184, LLC as
borrowers, Summit Hospitality JV, LP, as parent, each party executing
the credit facility documentation as a guarantor, Bank of America,
N.A., as administrative agent and initial lender, Wells Fargo Bank,
National Association as syndication agent and initial lender, BofA
Securities, Inc., as joint lead arranger and joint bookrunner and
Wells Fargo Securities, LLC as joint lead arranger and joint
bookrunner.
99.1 Press release issued January 13, 2022.
104 Cover Page Interactive Data File (embedded within the Inline XBRL
document)
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