Ashford Completes $267.2 Million Acquisition of Seven Full-Service Hotels
December 07 2006 - 4:58PM
Business Wire
Ashford Hospitality Trust, Inc. (NYSE: AHT): Acquisition
Highlights: Portfolio consists of Hilton, Marriott, Embassy Suites,
and Sheraton hotels in seven different markets Immediately will
invest approximately $40 million in capital improvement upgrades to
increase revenue and market competitiveness Change in property
management expected to generate stronger operating margins TTM NOI
cap rate of 6.0% and EBITDA yield of 7.5% for value-added portfolio
acquisition at below replacement cost pricing of $133,333 per key
Financing of up to $247 million secured for purchase and planned
renovations Intend to sell two assets and recycle capital Ashford
Hospitality Trust, Inc. (NYSE: AHT) today announced that it has
completed the acquisition of seven full-service, upper-upscale
hotels totaling 2,004 rooms for $267.2 million in cash ($133,333
per key). 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 changed
management of five of the hotels not targeted for sale from an
affiliate of Interstate Hotels and Resorts to Remington Management,
L.P. Ashford has commenced marketing the Sheraton Iowa City and
Marriott Trumbull properties. 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. The
acquisition was funded with proceeds from a $212 million first
mortgage from Countrywide Commercial Real Estate Finance and
proceeds from the Company�s July 2006 follow-on offering. The
Countrywide interest-only loan, which is secured by the seven
hotels, has a three-year term, bears interest at a rate of LIBOR
plus 172 basis points and is locked from prepayment for the first
18 months. The loan also provides for an additional funding of
$35.0 million for capital expenditures related to the value-added
improvements planned for the hotels. Monty Bennett, President and
CEO of Ashford Hospitality Trust, said, "We are pleased to complete
this acquisition and move forward with the value-added capital
improvements and aggressive property management plan our asset
management team has crafted that will enhance both top and
bottom-line performance. The attractive financing we were able to
secure on this portfolio not only provides us the flexibility to
fund this asset management plan but also pursue potential capital
recycling with the Trumbull and Iowa City hotels. We fully expect
that these well-branded, full-service hotels will generate returns
consistent with previous portfolios we have acquired and
aggressively asset managed." 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 expectation that the renovations will be
completed by the end of 2007, the potential capital recycling
through the sale of the Marriott Trumbull and Sheraton Iowa City,
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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