DALLAS, May 14, 2013 /PRNewswire/ --
Acquisition Highlights:
- Acquired at a trailing 12-month cap rate of 6.2% and trailing
12-month EBITDA yield of 7.0%
- Remington Lodging, which manages three other hotels in
Key West, to take over property
management
- Pro forma trailing 12-month cap rate of 8.4% and pro forma
trailing 12-month EBITDA multiple of 10.5x assuming Remington
management
- Minimal CapEx needs after recent $12
million renovation
- Key West, FL is the highest
barrier to entry market in the United
States, and the second highest RevPAR market
Ashford Hospitality Trust, Inc. (NYSE: AHT) today announced that
it has completed the previously-announced acquisition of the
142-room Pier House Resort and Caribbean Spa in Key West, Florida, for total consideration of
$90 million in cash ($634,000 per key). Ashford funded the
entire purchase price with cash on hand. At the end of the
first quarter, Ashford had total cash, cash equivalents, and
marketable securities of $234 million
and nothing drawn on its $165 million
corporate credit facility. The Company is currently in the
market evaluating property level debt financing for the
acquisition.
The purchase price of $90 million
represents a trailing 12-month cap rate of 6.2% on net operating
income and an EBITDA multiple of 14.3x. After completing its
operational synergy analysis assuming Remington was managing the
hotel for the previous twelve months, the Company estimates that
both net operating income and EBITDA would have been approximately
35% higher than the actual trailing 12-months. This equates
to a pro forma trailing 12-month cap rate of 8.4% and a pro forma
EBITDA multiple of 10.5x. In 2012, the hotel achieved RevPAR
of $275, with occupancy of 83% and an
Average Daily Rate of $333.
The Pier House Resort will be managed by Remington Lodging.
Remington now manages four hotels in Key West. These
include the Pier House Resort & Spa, the Southernmost House,
the Inn at Key West and the Crowne
Plaza La Concha Hotel, which is also owned by Ashford Hospitality
Trust.
Monty J. Bennett, Ashford's
Chairman and Chief Executive Officer, commented, "The Pier House
Resort acquisition demonstrates our ability to add a high RevPAR
hotel to our portfolio in an attractive market. Given the
Pier House's prime location in Key
West and difficulty adding rooms in that area due to the
local Rate of Growth Ordinance or "ROGO", this hotel presented a
compelling investment opportunity. We are confident that our
affiliated manager, Remington Lodging, will be able to realize
significant revenue enhancement opportunities and cost savings by
leveraging its existing presence in Key
West."
The Pier House Resort and Caribbean Spa was built in 1968.
It has 142 rooms including 119 guest rooms and 23 suites. The
hotel has 40 waterfront facing rooms and suites, and standard
guestrooms average 325 square feet, while the 23 suites average 710
square feet. Additionally, the hotel offers 2,600 square feet
of meeting space, a 10,000 square foot spa with 10 treatment rooms,
three food and beverage outlets including al fresco dining at
HarborView Cafe and the renowned Chartroom bar, a full-service
fitness facility and private dock for charter pick-ups. The
hotel is located at the northern end of Duval Street in the heart
of Key West on a 6-acre compound
with a private beach and immediate access to the Gulf of Mexico. Ashford expects to incur
minimal expenses related to capital improvements given a
$12 million dollar renovation
recently completed at the property.
Ashford 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.
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. EBITDA multiple
is defined as the purchase price divided by the annual
EBITDA. 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 of
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.
SOURCE Ashford Hospitality Trust, Inc.