$822M Texas deal includes 2 hotels in New Orleans

1600 Canal St. Photo courtesy of Springhill Suites and TownPlace Suites

Texas-based real estate investment firm Summit Hotel Properties is adding two downtown New Orleans hotels to its growing portfolio.

The publicly traded, Austin-based company has acquired a dual-brand Marriott hotel located at 1600 Canal St. in a building that previously housed offices for the University of New Orleans. The company also plans to purchase a Canopy by Hilton which is slated to open this year in the former Oil & Gas building at 1100 Tulane Ave.

The Canal Street hotel sold for $31 million earlier in January, according to Orleans Parish transportation records. The 13-story building reopened as a hotel in 2018 after undergoing top-to-bottom renovations.

A 74-room SpringHill Suites occupies floors 2 through 6, and a 105-room extended-stay TownPlace Suites property sits on floors 7 through 13. The two brands, both operated by Marriott International, share amenities including a lobby unique reception, check-in desk, breakfast room and bar on the ground floor. Both are managed and operated by the same entity and the same staff.

A notable feature of the property, built in the 1960s, is its rooftop, which has been transformed into a multi-purpose area overlooking Canal Street and the Caesars Superdome with an outdoor bar, exercise room, and laundry room.

Documents filed with the city show a construction value of $15.86 million for the renovation of approximately 131,000 square feet. The purchase was recorded on January 14.

“This announcement reinforces our optimism about the outlook for our business and validates our unique ability to source and pursue a wide range of capital alternatives and external growth opportunities, given our strong liquidity profile, balance sheet well-positioned and our overall resilient portfolio,” said Jonathan. Stanner, president and CEO of Summit Hotel Properties, in a statement.

The seller is Dallas-based hotel developer NewcrestImage, and the purchase was part of a much larger acquisition by Summit Hotel Properties of properties in NewcrestImage’s portfolio. The initial closure included 26 of 27 hotels owned by NewcrestImage, totaling 3,533 rooms, two car parks and other financial incentives.

The remaining hotel to be acquired by Summit is the Canopy by Hilton when it opened in the former Oil & Gas building. The company expects to complete the transaction in the first quarter of this year, according to a press release. The 176-room hotel will have a Cajun/Cantonese restaurant named Ginger Roux, run by chef Jonathan Hostetler. A meeting space with a balcony terrace was also included in the layout plans.

The acquisitions total $822 million and will make NewcrestImage one of Summit Hotel Properties’ largest shareholders. The dual-brand Marriott Hotel and Canopy by Hilton are the only New Orleans-area hotels that are part of the purchase.

The acquisitions bring Summit’s total number of properties to 101 across multiple states. Summit also owns three other Marriott hotels in downtown New Orleans and two in Metairie that were purchased for $135 million in 2013.

The transaction follows a string of high-profile purchases in New Orleans over the past six months.

New Orleans hotelier Joe Jaeger sold the 220-room Bourbon Orleans at the corner of Bourbon and Orleans streets in July to Maryland-based investment firm DiamondRock Hospitality Company for $81 million. Jaeger sold the Whitney Hotel at 610 Poydras St. to Mississippi native Robert Thompson in December for $16.9 million. Thompson also acquired the Frenchmen Hotel for an undisclosed sum in June.

Tyler Robinson, an agent for commercial real estate firm Urban Properties of New Orleans, represented Thompson in both transactions. He said it’s not uncommon for owners and operators to sell a hotel property, like the dual-brand hotel, a few years after it’s been in operation, but Hurricane Ida slowed those deals.

Robinson said he has seen occupancy rates for leisure travel increase in the city, even with some COVID-19 mandates still in place. Leisure travel, he said, rebounds faster from economic downturns, and he expects business travel to pick up later in 2022.

“It does not go unnoticed by any investors,” he said. “I think the hospitality sector will remain robust and we will see this trajectory continue this year and next year.”

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