Summit Hotel Priced IPO With Mixed Results (INN, IHG)

Summit Hotel Properties, Inc. (NYSE: INN) has priced its IPO and is set to begin trading Wednesday morning.  The deal has a bit of a mixed win-loss here in the terms and pricing.  This IPO has a size of 26 million shares at $9.75 per share.  The good news is that more shares were sold, but they were sold at a lower price.  Our prior indication was for 23 million shares in a price range of $10.50 to $12.50 per share.

Underwriters in the deal were Deutsche Bank, Robert W. Baird, RBC Capital Markets, KeyBanc Capital Markets, and Morgan Keegan.  The underwriters have been granted a 30-day option to purchase up to 3,900,000 additional shares at the public offering price to cover overallotments.

The company also expects to raise additional proceeds through a private placement to an affiliate of Intercontinental Hotels Group plc (BYSE: IHG).

Summit is a Hotel-REIT recently organized to continue and expand the existing hotel investment business of its predecessor, Summit Hotel Properties.  It plans to focus exclusively on acquiring and owning premium service hotels in the upscale and middle markets without food and beverage segments in U.S. lodging.  The initial portfolio of hotels will consist of 65 hotels with a total of 6,533 guestrooms located in 19 states.

Its brands include various Marriott brands, Holiday Inn Express, Hampton, Comfort Inn, Hyatt Place, aloft, Country Inn, and more. It has also acquired nearly $600 million in hotel properties.

JON C. OGG