Ashford Signs Agreement To Acquire Portfolio of Seven Full Service Hotels for $267.2 Million
September 18 2006 - 9:00AM
PR Newswire (US)
Acquisition Highlights: DALLAS, Sept. 18 /PRNewswire-FirstCall/ --
Ashford Hospitality Trust, Inc. (NYSE:AHT) today announced that it
has signed a definitive agreement to acquire seven full-service,
upper-upscale hotels totaling 2,004 rooms for $267.2 million in
cash ($133,333 per key) from a partnership of affiliates of Oak
Hill Capital Partners, The Blackstone Group and Interstate Hotels
and Resorts. The seven hotels include the 263-room Embassy Suites
Philadelphia Airport in Philadelphia, Pennsylvania, the 249-room
Embassy Suites Walnut Creek in Walnut Creek, California, the
300-room Hilton Minneapolis Airport in Bloomington, Minnesota, the
375-room Sheraton Anchorage in Anchorage, Alaska, the 260-room
Sheraton San Diego Mission Valley in San Diego, California, the
323-room Marriott Trumbull in Trumbull, Connecticut, and the
234-room Sheraton Iowa City in Iowa City, Iowa. Ashford intends to
invest approximately $40.0 million in revenue- generating brand
improvements during the next 12 months. The purchase price
represents a trailing 12-month cap rate of 6.0% on net operating
income, an EBITDA yield of 7.5% and a 13.4x EBITDA multiple.
Ashford will fund the acquisition with proceeds from its July 2006
follow-on offering along with property level financing. Ashford
will change management of the hotels from an affiliate of
Interstate Hotels and Resorts to an affiliate of Remington Lodging.
The acquisition is expected to close on or before December 7, 2006.
Monty Bennett, President and CEO of Ashford Hospitality Trust,
said, "This portfolio of well-branded, full-service hotels presents
an attractive array of opportunities for Ashford to create value
through renovations and more aggressive management of the assets.
The renovations should position the properties for significant
RevPAR penetration gains within their competitive sets, while a
focus on improving service and closer attention to operating
expenses should result in substantial improvement in operating
margin flow- through once the renovations are completed. Other
strategic opportunities to create value are also being explored,
such as rebranding. We believe that, with the proper physical
upgrades and management, these hotels will deliver returns
consistent with our investment thresholds. We find the markets,
brands, initial value, and upside opportunity to be very
attractive." * * * * * 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 timing for closing, the expectation that the
renovations will be completed by the end of 2007, 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 either 4% or 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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