Ashford Hospitality Trust Completes Acquisition of 21-Hotel Portfolio for $250 Million
March 17 2005 - 8:00AM
PR Newswire (US)
Ashford Hospitality Trust Completes Acquisition of 21-Hotel
Portfolio for $250 Million Acquisition Highlights: DALLAS, March 17
/PRNewswire-FirstCall/ -- Ashford Hospitality Trust, Inc.
(NYSE:AHT) announced it has completed the acquisition of the
21-property, 4,094-room hotel portfolio from entities controlled by
affiliates of the Fisher Brothers, the Gordon Getty Trust, and
George Soros collectively as majority partners, and certain members
of Ashford's senior management team as minority partners for total
consideration of $250 million. The purchase price is comprised of
$35.0 million in cash, the issuance of $50.3 million in operating
partnership units, and the assumption of $164.7 million in debt.
The purchase price equates to an 8.8x trailing twelve-month EBITDA
multiple, an EBITDA yield of 11.4% and a trailing twelve-month net
operating income capitalization rate of 9.5% on the entire 21-hotel
portfolio based on a trailing 12-month NOI of $23.7 million. The
average cost of the assumed debt will be 7.1% following the
repayment of approximately a $14.7 million mezzanine loan. The
operating partnership units were priced at $10.07 using the 20-day
average closing price calculated 5 business days prior to the
signing of the definitive agreement in December 2004. Ashford
management, comprising approximately 22% of the selling entity,
structured approximately 100% of their net consideration in the
form of operating partnership units. The Fisher, Getty, and Soros
entities, comprising approximately 78% of the ownership interests
in the selling entity, structured approximately 50% of their
consideration in cash and 50% in operating partnership units. The
core portfolio consists of 13 hotels across 5 brands and one
independent comprising 3,099 total rooms: Houston Embassy Suites
Galleria in Houston, TX; Houston Hilton NASA/Clearlake in Houston,
TX; Fort Worth Radisson in Fort Worth, TX; St. Petersburg Hilton in
St. Petersburg, FL; West Palm Beach Embassy Suites and Admiralty
Office Building in West Palm Beach, FL; Key West Crowne Plaza
LaConcha in Key West, FL; Sheraton Minneapolis West in Minnetonka,
MN; Beverly Hills Crowne Plaza in Los Angeles, CA; Rockland
Radisson Hotel Boston/South Shore in Rockland, MA; Milford Radisson
in Milford, MA; Indianapolis Airport Radisson Hotel in
Indianapolis, IN; Indianapolis Radisson Hotel City Centre in
Indianapolis, IN; and the Historic Inns in Annapolis, MD. Remington
Lodging & Hospitality, an affiliate of the current manager of
the properties, will operate the hotels. Ashford intends to spend
approximately $30 million for capital improvements to the core
properties. The scope and completion dates vary by property, but
should largely be completed by the first quarter of 2006. The
non-core hotels include: Coral Gables Holiday Inn in Coral Gables,
FL; Yarmouth Gull Wing Suites in South Yarmouth, MA; Hyannis Ramada
Inn Regency in Hyannis, MA; Falmouth Inn on the Square in Falmouth,
MA; Best Western in Dallas, TX; Ramada Inn in Warner Robbins, GA;
Commack Howard Johnson in Commack, NY; and Westbury Howard Johnson
in Jericho, NY. Ashford is currently evaluating various
alternatives for the non-core hotels. Monty J. Bennett, President
and CEO of Ashford Hospitality Trust, said, "The completion of this
acquisition marks what is expected to be a very active year for
Ashford in 2005. Given the timing of the completion, we expect this
portfolio to begin contributing to our results in the second
quarter. With the value-added opportunities we are pursuing through
the renovation of these hotels in 2005, we expect this portfolio to
be a significant growth catalyst for the next couple of years. I
would also add that through this transaction we have increased the
percentage of full-service, upper-upscale and upscale assets in our
overall portfolio, further diversified by brand and markets,
increased the percentage of fixed-rate debt on our balance sheet,
and continued to align management's interests with shareholders.
Entities controlled by respected investors such as the Fisher
Brothers, Gordon Getty Trust, and George Soros structured a sizable
portion of their consideration in this transaction in the form of
operating partnership units which speaks to the attractiveness of
Ashford's investment platform." Ashford Hospitality Trust is a
self-administered real estate investment trust focused on investing
in the hospitality industry across all segments and at all levels
of the capital structure, including direct hotel investments, first
mortgages, mezzanine loans and sale-leaseback transactions.
Additional information can be found on the Company's web site at
http://www.ahtreit.com/. Certain statements and assumptions in this
press release contain or are based upon "forward-looking"
information and are being made pursuant to the safe harbor
provisions of the Private Securities Litigation Reform Act of 1995.
These forward-looking statements are subject to risks and
uncertainties. When we use the words "will likely result," "may,"
"anticipate," "estimate," "should," "expect," "believe," "intend,"
or similar expressions, we intend to identify forward-looking
statements. Such forward-looking statements include, but are not
limited to, the impact of the transaction on our business and
future financial condition, our business and investment strategy,
our understanding of our competition and current market trends and
opportunities and projected capital expenditures. Such statements
are subject to numerous assumptions and uncertainties, many of
which are outside Ashford's control. These forward-looking
statements are subject to known and unknown risks and
uncertainties, which could cause actual results to differ
materially from those anticipated, including, without limitation:
general volatility of the capital markets and the market price of
our common stock; changes in our business or investment strategy;
availability, terms and deployment of capital; availability of
qualified personnel; changes in our industry and the market in
which we operate, interest rates or the general economy; and the
degree and nature of our competition. These and other risk factors
are more fully discussed in Ashford's filings with the Securities
and Exchange Commission. EBITDA is defined as net income before
interest, taxes, depreciation and amortization. EBITDA yield is
defined as trailing twelve month EBITDA divided by the purchase
price. A capitalization rate is determined by dividing the
property's annual net operating income by the purchase price. Net
operating income is the property's funds from operations minus a
capital expense reserve of 4% of gross revenues. Funds from
operations ("FFO"), as defined by the White Paper on FFO approved
by the Board of Governors of the National Association of Real
Estate Investment Trusts ("NAREIT") in April 2002, represents net
income (loss) computed in accordance with generally accepted
accounting principles ("GAAP"), excluding gains (or losses) from
sales or properties and extraordinary items as defined by GAAP,
plus depreciation and amortization of real estate assets, and net
of adjustments for the portion of these items related to
unconsolidated entities and joint ventures. The forward-looking
statements included in this press release are only made as of the
date of this press release. Investors should not place undue
reliance on these forward-looking statements. We are not obligated
to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or
circumstances, changes in expectations or otherwise. Contact:
Douglas Kessler Chief Operating Officer and Head of Acquisitions
(972) 490-9600 or Tripp Sullivan Corporate Communications, Inc.
(615) 254-3376 DATASOURCE: Ashford Hospitality Trust, Inc. CONTACT:
Douglas Kessler, Chief Operating Officer and Head of Acquisitions
of Ashford Hospitality Trust, +1-972-490-9600; or Tripp Sullivan of
Corporate Communications, Inc., +1-615-254-3376 Web site:
http://www.ahtreit.com/
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