Ashford Hospitality Initiates First Phase of Deleveraging Strategy
March 01 2007 - 9:00AM
Business Wire
Ashford Hospitality Trust, Inc. (NYSE: AHT): Highlights: Initiates
first phase of deleveraging strategy 16 hotels and two office
buildings expected to generate at least $170 million in gross
proceeds Expects to report net gain of approximately $33 million in
2007 Ashford Hospitality Trust, Inc. (NYSE: AHT) today stated that,
in connection with its previously announced agreement to acquire a
51-hotel portfolio from CNL Hotels and Resorts for $2.4 billion,
the Company has accelerated its ongoing capital recycling efforts.
The total number of non-strategic assets currently being marketed
has been increased to 18, including two office buildings. The
sales, some of which have already closed or are under contract or
letters of intent, are expected to generate approximately $170
million in gross proceeds and result in a net gain of approximately
$33 million, or $0.35 per diluted share, in 2007. The non-core
assets marketed for sale include: a portfolio of seven Towne Place
Suites; office buildings adjacent to the Hilton Fort Worth in Fort
Worth, TX, and Embassy Suites in West Palm Beach, FL; the
Doubletree Guest Suites in Dayton, OH; the Radisson Hotel
Indianapolis Airport in Indianapolis, IN; the Embassy Suites in
Phoenix, AZ; the Radisson Hotel in Covington, KY; the Hampton Inn
in Horse Cave, KY; the Fairfield Inn in Princeton, IN; the
Fairfield Inn in Evansville, IN; the Marriott Trumbull in Trumbull,
CT; and the Sheraton Iowa City in Iowa City, IA. These non-core
hotel assets account for a total of 2,399 rooms. For 2007, the 18
assets are expected to generate approximately $19 million in EBITDA
and $14.5 million in FFO, or $0.16 per diluted share, annually. At
projected sales prices, the hotel assets are expected to sell at
trailing 12-month EBITDA yields of 9.8% and net operating income
cap rates of 7.9%. The income tax on the gains is expected to be
deferred through section 1031 tax-free exchanges. Monty J. Bennett,
President and Chief Executive Officer of Ashford, commented, "We
noted at the time of our agreement to acquire the 51-hotel
portfolio, that deleveraging our balance sheet would be a priority
for us. In anticipation of this transaction, we�ve put in motion
various deleveraging strategies including single asset sales,
portfolio sales and joint ventures. We monitor our portfolio and
select assets for sale based upon growth prospects, portfolio
allocation, shifts in capital markets, capital expenditure
requirements and opportunity costs. We have a high-quality
portfolio that offers many capital recycling alternatives. We will
continue to maximize our monetization strategies as we approach our
targeted leverage levels.� 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
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 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.
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