AR Capital Hospitality Trust Terminates $89 Million Portfolio Purchase

American Realty Capital Hospitality Trust Inc., a publicly registered non-traded real estate investment trust sponsored by AR Capital, terminated its $89.1 million purchase agreement for 10 hotels with Summit Hotel OP.

The cancellation of the 996-room portfolio sale, which was expected to close on December 29, 2015, resulted in the forfeiture of a $9.1 million earnest money deposit.

As reported by The DI Wire in June 2015, the REIT agreed to acquire a portfolio of 26 hotels in three tranches from Summit for approximately $350 million. The company closed on 10 hotels in the portfolio in October for $150 million, and indicated that the termination does not affect the purchase of the remaining six properties.

This isn’t the first portfolio sale termination for the company in recent weeks. At the end of December, ARC Hospitality Trust terminated its agreement to purchase a portfolio of five Marriot-branded hotels from affiliates of the Wheelock Real Estate Fund for $92.9 million, according to a filing with the Securities and Exchange Commission.

In November 2015, AR Capital announced that it will stop offering and selling new investment products after December 31st, including shares of American Realty Capital Hospitality Trust. Realty Capital Securities, the REIT’s dealer manager, also suspended the sales activities it performs for its initial public offering. These changes followed a series of scandals involving AR Capital and its affiliates, originally stemming from intentional accounting irregularities at ARCP revealed in October 2014 and concluding with proxy fraud charges being filed by the state of Massachusetts a year later.

ARC Hospitality focuses on acquiring stable, institutional quality and strategically located lodging properties in North America branded by premium national hotel brands.