Ashford Hospitality Trust to Acquire 30-Hotel Portfolio for $465 Million
April 27 2005 - 9:36AM
PR Newswire (US)
Ashford Hospitality Trust to Acquire 30-Hotel Portfolio for $465
Million Reports First Quarter Revpar Increase of 12.5% DALLAS,
April 27 /PRNewswire-FirstCall/ -- Ashford Hospitality Trust, Inc.
(NYSE:AHT) announced it has signed a definitive agreement to
acquire a 30-property, 4,328-room hotel portfolio from CNL Hotels
and Resorts for $465 million in cash. The purchase price equates to
a trailing twelve-month net operating income capitalization rate of
approximately 8.4% on the entire 30-hotel portfolio. The portfolio
consists of 13 Residence Inns by Marriott in 9 states; 6 Courtyards
by Marriott in 5 states; 7 TownePlace Suites by Marriott in 6
states; and 4 SpringHill Suites by Marriott in 3 states. The hotels
in the portfolio have an average age of 8.9 years with a majority
of the hotels built between 1997 and 2000. For 2004, the
portfolio's occupancy improved by 340 basis points to 75.1%, ADR
increased 5.6% to $93.65, and RevPAR increased 10.5% to $70.37. For
the first quarter of 2005, RevPAR for the portfolio increased 15.6%
over the first quarter 2004. Marriott International will continue
to operate the hotels under an incentive management agreement. For
2005 and 2006, the Company projects investing, including the normal
reserves, a total of approximately $34 million in capital
expenditures comprised of approximately $18 million to be committed
in 2005 and approximately $16 million to be committed in 2006. The
scope and completion dates vary by property, but the majority of
the work is concentrated in the 13 Residence Inns and the 7
TownePlace Suites. The Company intends to fund the transaction from
several sources including: a financing commitment from Merrill
Lynch Mortgage Lending, Inc. for $370 million at a fixed rate
locked at 5.32%, undrawn proceeds from Security Capital's remaining
convertible preferred or participation in Ashford's January common
stock offering, revolver capacity or cash on the balance sheet.
Upon closing, Ashford Hospitality Trust will own 82 hotels
containing 13,244 rooms. Seventy-six percent (76%) of the hotels
are Marriott, Hilton, Starwood and Hyatt branded. With the addition
of these assets to the Company, 50% of the portfolio will be full
service, and 50% will be select service. Thirty-one percent (31%)
will be upper-upscale, 54% upscale, and 15% mid- scale. The
Company's debt will be 77% fixed rate and 23% floating rate.
Ninety-five percent (95%) of the total debt is fixed, capped or
hedged. The Company's direct hotel investments will be managed by
seven different managers. Monty J. Bennett, President and CEO of
Ashford Hospitality Trust, said, "This transaction demonstrates
Ashford's broad market strategy of combining solid hotel assets
with financial engineering to deliver high returns on invested
capital to our shareholders. While our most recent large portfolio
transaction was almost entirely full-service, this select service
and extended stay acquisition exemplifies the diversity of our
investment objectives and market reach. These assets contribute to
our growing portfolio of strong RevPAR-performing,
geographically-diversified, premier-branded assets. Through this
transaction, we have also further diversified our property managers
with the addition of Marriott International. With the opportunity
for Marriott to participate in an incentive participation
structure, we expect Marriott to continue to aggressively expand
the RevPAR penetration of these properties within their competitive
sets. We are pleased to expand our portfolio with this attractive
yielding and diversified portfolio. "Regarding our existing
portfolio, our first quarter RevPAR gains reflect the benefits of
our capital expenditures and aggressive asset management. We
acquired our assets at going-in yields at the high end of our
targeted range and continue to see acceleration in performance."
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 expectation that
the transaction will close in June 2005, 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. 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
5% 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 Tripp Sullivan Corporate Communications, Inc. (615)
254-3376 DATASOURCE: Ashford Hospitality Trust, Inc. CONTACT:
Douglas Kessler, Chief Operating Officer and Head of Acquisitions,
+1-972-490-9600, or Tripp Sullivan, Corporate Communications, Inc.,
+1-615-254-3376, both of Ashford Hospitality Trust, Inc. Web site:
http://www.ahtreit.com/
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