DALLAS, July 2, 2018 /PRNewswire/ -- Ashford
Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust" or the
"Company") announced today that it has completed the previously
disclosed acquisition of the 252-room Hilton Alexandria Old Town
located in Alexandria, Virginia,
for total consideration of $111
million.
This acquisition of the Hilton Alexandria Old Town is expected
to be Ashford Trust's first hotel acquisition to benefit from the
Enhanced Return Funding Program (the "Program" or "ERFP"), which
was announced on June 26, 2018.
In connection with this acquisition and subject to the terms of the
ERFP, Ashford Inc. has committed to provide Ashford Trust with
approximately $11.1 million of cash
via the future purchase of hotel furniture, fixtures, and equipment
("FF&E") at Ashford Trust properties.
Concurrent with the completion of the acquisition, the Company
has financed the hotel with a $73.5
million non-recourse mortgage loan. The interest-only
loan has a term of five years and bears interest at a rate of LIBOR
+ 2.45%. The property will continue to be operated as a
Hilton under a management agreement with Hilton.
Inclusive of the funds provided by Ashford Inc. under the
Program in relation to the Hilton Alexandria Old Town acquisition
and assuming the Ashford Inc. funding were to occur at closing, the
adjusted net purchase price per key equates to approximately
$396,000, and represents, as of
May 31, 2018, an estimated trailing
12-month capitalization rate on net operating income of 8.3% and a
trailing 12-month EBITDA multiple of 10.9x according to the
Company's estimates based upon unaudited financial data provided by
the sellers1. The Company believes the ERFP would
improve the estimated leveraged internal rate of return of the
transaction by approximately 1,130 basis points2,
assuming leverage of 66% on the acquired
hotel3.
"We are pleased to complete the acquisition of the Hilton
Alexandria as it is not only an accretive addition to our
portfolio, but it is also the first transaction expected to benefit
from the new Enhanced Return Funding Program with Ashford Inc.
which we believe should further improve the returns to our
shareholders," said Douglas A.
Kessler, Ashford Trust's President and Chief Executive
Officer. "Going forward, we expect this funding arrangement will be
a clear competitive advantage for us as we continue to look for
opportunities to grow our platform and increase stockholder
value."
Ashford Hospitality Trust is a real estate investment trust
(REIT) focused on investing opportunistically in the hospitality
industry in upper upscale, full-service hotels.
Ashford has created an Ashford App for the hospitality REIT
investor community. The Ashford App is available for free
download at Apple's App Store and
the Google Play Store by searching "Ashford."
1)
|
Without ERFP funding,
the capitalization rate would be 7.5% and the Hotel EBITDA multiple
would be 12.1x.
|
2)
|
Assumes
property-level mortgage financing of 66%, 10% of purchase price
funded by AHT corporate preferreds, closing/other costs of 2.5% of
purchase price, and funding of ERFP at end of year one.
|
3)
|
Ashford Inc. is not
expected to acquire FF&E on the closing date of Hilton
Alexandria Old Town, therefore the capitalization rate, the
internal rate of return, and the Hotel EBITDA multiple will depend
upon the timing of ERFP funding.
|
Ashford
Hospitality Trust
|
Hilton Alexandria
Old Town
|
Reconciliation of
Hotel Net Income to Hotel EBITDA and Hotel Net Operating
Income
|
(Unaudited, in
millions)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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12
Months
|
|
|
|
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Ended May 31,
2018
|
|
Hotel Net
Income
|
|
$
|
4.8
|
|
|
|
|
|
|
|
Adjustment:
|
|
|
|
|
|
Depreciation and
amortization
|
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$
|
-
|
|
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Interest
expense
|
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$
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4.4
|
|
|
|
|
|
|
|
Hotel
EBITDA
|
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$
|
9.2
|
|
|
|
|
|
|
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Adjustment:
|
|
|
|
|
|
Capital
reserve
|
|
$
|
(0.8)
|
|
|
|
|
|
|
|
|
|
|
|
|
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Hotel Net Operating
Income
|
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$
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8.3
|
|
|
|
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|
|
|
|
|
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|
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(1) All
information in this table is based upon unaudited operating
financial data for the prior twelve month
|
period ended May 31,
2018. This data has not been audited or reviewed by the
Company's independent
|
registered public
accounting firm. The financial information presented could
change.
|
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 statements are subject to
numerous assumptions and uncertainties, many of which are outside
Ashford Trust'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 Trust's
filings with the Securities and Exchange Commission.
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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SOURCE Ashford Hospitality Trust, Inc.