Ashford Hospitality Trust Acquires 30-Hotel Portfolio for $465 Million and Completes Securities Issuance to Security Capital
June 20 2005 - 8:30AM
PR Newswire (US)
Ashford Hospitality Trust Acquires 30-Hotel Portfolio for $465
Million and Completes Securities Issuance to Security Capital
DALLAS, June 20 /PRNewswire-FirstCall/ -- Acquisition Highlights:
-- Acquired at a trailing 12-month net operating income cap rate of
approximately 8.5% -- Price per key of $107,000 -- Composed of 30
select service Marriott branded and managed hotels in 27 markets
across 16 states -- Fixed-rate financing proceeds of $370 million
at 5.32% for 10 years locks in favorable leveraged returns --
Ashford's direct, core hotel portfolio increases to 77 assets
totaling 12,679 rooms -- Ashford's total investments reach
approximately $1.4 billion placing Ashford as one of the larger
publicly traded hotel REITs Security Capital Transaction: --
Ashford issues to Security Capital Preferred Growth Incorporated
all remaining Series B preferred stock under the Convertible
Preferred Stock Purchase Agreement with Security Capital
representing 6,454,816 shares -- Ashford issues notice to Security
Capital of the exercise of its option to sell 2,070,000 shares of
Common Stock with closing set for July 1, 2005 -- After closing on
July 1, 2005, no preferred or common stock commitments remain with
Security Capital Ashford Hospitality Trust, Inc. (NYSE:AHT)
announced it closed on the acquisition of the previously announced
30-property, 4,328-room hotel portfolio from CNL Hotels and Resorts
for $465 million in cash. The purchase price equates to a trailing
12-month net operating income capitalization rate of approximately
8.5% on the entire 30-hotel portfolio. The portfolio consists of 13
Residence Inns by Marriott in nine states; six Courtyards by
Marriott in five states; seven TownePlace Suites by Marriott in six
states; and four SpringHill Suites by Marriott in three 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 composed 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 seven
TownePlace Suites. The Company funded the transaction with a $370
million 10-year mortgage loan from Merrill Lynch Mortgage Lending,
Inc. at a fixed rate of 5.32%, $64,700,997 in net proceeds from the
issuance of 6,454,816 shares of Series B-1 Preferred Stock to
Security Capital Preferred Growth Incorporated and cash on the
balance sheet. This latest issuance of Series B cumulative
convertible preferred shares represents all remaining preferred
shares committed to be issued under the Convertible Preferred Stock
Purchase Agreement dated December 27, 2004, with Security Capital
Preferred Growth Incorporated. The preferred dividend is set at the
greater of $0.14 per share per quarter or the prevailing quarterly
common stock dividend. In addition, Ashford has exercised its
option to sell to Security Capital 2,070,000 shares of common stock
for closing to occur on July 1, 2005. This participation right
coincides with the January 2005 equity raise. Ashford Hospitality
Trust now owns 77 core hotels containing 12,679 rooms. Seventy nine
percent (79%) of the rooms are Marriott, Hilton, Starwood and Hyatt
branded. The Company's total portfolio is 50% full service, and 50%
select service. Thirty-one percent (31%) of the portfolio is
upper-upscale, 57% upscale, and 12% mid-scale. The Company's direct
hotel investments are managed by seven different managers. Monty J.
Bennett, President and CEO of Ashford Hospitality Trust, said, "The
timely closing of this transaction, combined with the continued
strong performance of the hotels in the portfolio and the
attractive financing we secured, has positioned us for strong
growth in 2005 and beyond. Our recent decision to increase our
second quarter dividend was a direct result of the favorable
outlook at these hotels and their expected positive impact on our
operations. We are pleased with the diversification this
acquisition brings to our portfolio in terms of brand, segment,
property managers and geography." 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. A capitalization rate is determined by
dividing the property's annual net operating income by the purchase
price. 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
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. DATASOURCE:
Ashford Hospitality Trust, Inc. CONTACT: Douglas Kessler, COO and
Head of Acquisitions of Ashford Hospitality Trust, Inc.,
+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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