Ashford Acquires Marriott Crystal Gateway in Washington D.C. Area
May 18 2006 - 6:49PM
PR Newswire (US)
Acquisition Highlights: - Acquired for $100 million with a
reimbursement to seller for $7 million of recently spent CapEx
DALLAS, May 18 /PRNewswire-FirstCall/ -- Ashford Hospitality Trust,
Inc. (NYSE:AHT) announced it has signed a definitive agreement to
acquire the 697- room Marriott Crystal Gateway in Arlington,
Virginia, for total consideration of $107.0 million ($153,515 per
key) from EADS, a partnership headed by Robert H. Smith and Arthur
A. Birney. The seller was represented by Molinaro Koger. Marriott
Crystal Gateway is managed by Marriott International under a long-
term management agreement. The acquisition is expected to close
within 30 days. The purchase price is comprised of the assumption
of a $53.5 million loan with a fixed interest rate of 7.24% and
maturity date of 2017, the reimbursement of capital expenditures
costs of approximately $7.0 million, and the issuance of
approximately $46.5 million in Class B Operating Partnership units.
The Class B Operating Partnership units are priced at $11.20 per
unit, will have a fixed dividend of 6.63% in years 1-3 and 7.0%
thereafter based upon the $11.20 per unit price, and will have
priority over common dividends. After 10 years, either party may
convert the units to common units. On a trailing 12-month basis,
the purchase price represents a cap rate of 9% on net operating
income and an 8.8x EBITDA multiple. Marriott Crystal Gateway has
697 rooms, 33,355 square feet of meeting space and 2 food and
beverage facilities. Opening in 1982 with the 453-room Capital
Tower and subsequently adding the 244-room Arlington Tower in 1986,
the hotel completed a $9.5 million renovation in 2002 and renovated
the lobby and food and beverage areas in 2005. Ashford expects to
invest $13 million during the first year of ownership on additional
capital improvements to complete a full guestroom renovation. The
Marriott Crystal Gateway is one of two hotels that directly connect
to the Metro, DC's rapid transit rail system. The hotel is located
within Crystal City, a premier office, residential and retail
market, and minutes away from Reagan National Airport. Monty
Bennett, President and CEO of Ashford Hospitality Trust, said, "The
Marriott Crystal Gateway acquisition is another example of our
ability to acquire off-market hotels at accretive yields utilizing
favorable structures. With an operating partnership structure, we
were able to make good use of Ashford's currency at a price premium
to the last offering, and at a stated payment that is less than the
current dividend payment. This per-key price for an upper-upscale
hotel in such a high demand location with strong barriers to entry
represents a value well below today's replacement cost. We expect
this hotel to benefit from increased demand in the DC hotel market,
aggressive yield and asset management, and further RevPAR
penetration resulting from the recent and future capital
expenditures. We look forward to adding this hotel to our growing
portfolio of luxury, upper-upscale, and upscale hotels." 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 renovation will be completed in the next 12 months, 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 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
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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