Ashford Hospitality Trust, Inc. (NYSE: AHT):
Portfolio and Transaction Highlights
- Includes 19 full-service hotels and
nine select-service hotels
- Concentration in major brands such as
Hilton, Marriott, Hyatt and Starwood
- Expands Ashford’s presence in major
markets such as Boston and Washington, D.C.
- Pricing equals $158,000 per key and
13.4x EBITDA multiple for 2010
- Ashford’s joint venture contribution
includes $150 million of cash and $786 million of assumed debt for
a 71.74% interest
- Additional potential growth available
with current NOI 36% below peak levels and new management for 17 of
the hotels
- Ashford is the second largest lodging
REIT at 26,411 rooms
- The Highland hotels achieved a 2010
EBITDA flow of 18% while Ashford’s portfolio had an EBITDA flow of
104%
Ashford Hospitality Trust, Inc. (NYSE: AHT) today announced it
has formed a new joint venture with an institutional partner to
take ownership of the 28-hotel Highland Hospitality portfolio. The
acquisition and restructuring were completed through a consensual
foreclosure for total consideration of $1.277 billion.
Transaction Details
The total consideration equates to a purchase price of $158,000
per key compared with $244,000 per key before capital improvement
funding when the portfolio was acquired in 2007 in a privatization
of publicly traded Highland Hospitality. Based on 2010 results, the
purchase price equates to an EBITDA multiple of 13.4x and a
capitalization rate of 6.1% utilizing NOI that is approximately 36%
below its peak levels.
The portfolio’s total revenues for 2010 grew 2.7% from 2009,
compared to Ashford’s existing portfolio which grew 1.1% in 2010.
Ashford’s existing portfolio had 104% EBITDA flow in 2010 while the
new portfolio had only 18% flow. Ashford currently trades at a 2010
EBITDA multiple of 15.6x based on its closing price yesterday.
Highland Hospitality originally paid $150,000 per key before
capital improvement funding for the portfolio from 2003 to
2007.
At closing, Ashford invested $150 million and will own 71.74% of
the joint venture. The new money investment from Ashford and the
institutional partner was utilized to reduce debt and to fund
projected capital expenditures. Ashford funded its contribution
from available cash. From the total new money investment a $32
million reserve was set aside at closing to be used for owner
funded capital expenditures. Ashford’s 71.74% ownership interest
partially reflects previous investments made by Ashford.
The joint venture worked out a consensual restructuring with the
existing senior lenders. The existing senior lenders will provide
$530 million of first mortgage three-year financing with two
one-year extension options on 25 of the hotels and the joint
venture assumed first mortgage financing of $146 million on three
of the hotels with approximately two years remaining until
maturity. Additionally certain lenders will provide $419 million of
mezzanine financing that will cover all 28 hotels. The structure
provides for fixed and floating rates with LIBOR floors and spreads
for various tranches with an anticipated first year interest rate
of 5.25% based upon the current forward LIBOR curve.
Monty Bennett, CEO of Ashford, noted, “We are pleased to
complete this strategic and accretive transaction. Of all the hotel
transactions we have seen completed, we believe it would be hard to
match the many benefits of this investment. We believe there is a
substantial opportunity to improve the hotels’ performance with an
aggressive asset management strategy similar to what we have
accomplished with our existing hotels.”
Portfolio Composition
The portfolio is mostly comprised of full-service, upper-upscale
and luxury hotels that generate 67% of 2010 EBITDA. These 17 hotels
have 5,684 rooms and include brands such as Ritz-Carlton, Marriott,
Hilton, Hyatt, Renaissance, Sheraton and Westin. The remaining 11
hotels have 2,400 rooms and include brands such as Crowne Plaza,
Hilton Garden Inn, Courtyard, Residence Inn and Hampton Inn. There
are also three independent hotels. For 2010, the portfolio’s RevPAR
increased 3.7% to $91.91 with occupancy at 69.4% and ADR at
$132.48, and total hotel revenues were $386 million.
Based on 2010 EBITDA, the hotels are 65% upper-upscale, 32%
upscale, 2% luxury and 1% upper midscale; and 47% Marriott, 26%
Hilton and 9% Hyatt. Geographic diversification by EBITDA includes
36% for South Atlantic, 29% for South Central, 17% for New England,
11% Middle Atlantic and 5% North Central.
During the next 10 months the venture intends to invest
approximately $43 million in a capital improvement program to
upgrade these hotels. This program will be funded through existing
and on-going reserves at the property level together with the $32
million set aside for owner funded capital improvements.
Remington Lodging will manage 17 of the hotels, followed by 6
with Marriott, 2 each for Hyatt and McKibbon and 1 for Hilton.
Ashford will asset manage the entire portfolio on behalf of the
joint venture.
Investor Conference Call
Ashford Hospitality Trust, Inc. will conduct a conference call
at 11:00 a.m. ET on Friday March 11, 2011, to discuss the
transaction. The number to call for this teleconference is
212-231-2913. A seven-day replay of the conference call will be
available by dialing 402-977-9140 and entering the confirmation
number, 21513833.
The Company will also provide an online simulcast and
rebroadcast of its conference call. The live broadcast of Ashford's
call will be available online at the Company's website at
www.ahtreit.com as well as on
http://www.videonewswire.com/event.asp?id=77249 on
March 11, 2011, beginning at 11:00 a.m. ET. The online
replay will follow shortly after the call and continue for
approximately one year.
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 website 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.
Portfolio Listing 2011
Hotel Chain Scale Brand Family Market
State Rooms Renovation Ritz-Carlton Atlanta
Luxury Marriott Atlanta GA 444 Yes Hilton Tampa Westshore
Upper-Upscale Hilton Tampa FL 238 Hilton Parsippany Upper-Upscale
Hilton NY/NJ NJ 354 Hilton Boston Back Bay Upper-Upscale Hilton
Boston MA 390 Yes Hyatt Regency Savannah Upper-Upscale Hyatt
Savannah GA 351 Hyatt Regency Windwatch Upper-Upscale Hyatt NY/NJ
NY 358 Yes Portsmouth Renaissance Upper-Upscale Marriott
Norfolk/Va. Beach VA 249 Sugar Land Marriott Upper-Upscale Marriott
Houston TX 300 Plaza San Antonio Marriott Upper-Upscale Marriott
San Antonio TX 251 Yes DFW Airport Marriott Upper-Upscale Marriott
Dallas TX 491 Yes Omaha Marriott Upper-Upscale Marriott Omaha NE
300 Yes Renaissance Palm Springs Upper-Upscale Marriott Palm
Springs CA 410 Nashville Renaissance Upper-Upscale Marriott
Nashville TN 673 The Churchill Upper-Upscale Other Washington DC DC
173 Yes The Melrose (DC) Upper-Upscale Other Washington DC DC 240
Yes Sheraton Annapolis Upper-Upscale Starwood Baltimore MD 196
Westin Princeton Upper-Upscale Starwood Trenton NJ 296 Hilton
Garden Inn Austin Upscale Hilton Austin TX 254 Hilton Garden Inn
BWI Airport Upscale Hilton Baltimore MD 158 Hilton Garden Inn
Virginia Beach Upscale Hilton Norfolk/Va. Beach VA 176 Crowne Plaza
Ravinia Upscale IHG Atlanta GA 495 Yes Courtyard Boston Tremont
Upscale Marriott Boston MA 315 Yes Courtyard Denver Airport Upscale
Marriott Denver CO 202 Yes Courtyard Gaithersburg Upscale Marriott
Washington DC MD 210 Courtyard Savannah Upscale Marriott Savannah
GA 156 Yes Residence Inn Tampa Downtown Upscale Marriott Tampa FL
109 Silversmith Upscale Other Chicago IL 143 Yes Hampton Inn
Parsippany Upper Midscale Hilton NY/NJ NJ 152
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