DALLAS, Feb. 27, 2019 /PRNewswire/ --
Acquisition Highlights:
- High-quality, full-service hotel located in the growing and
high barrier-to-entry Santa Cruz,
California market
- Exceptional amenities including a full-service restaurant,
7,900 square feet of flexible meeting space, outdoor pool and
fitness center
- Revenue per available room (RevPAR) of $158 for the 12 months ended December 31, 2018
- Property is in excellent physical condition with limited capex
needs
- Issued approximately 1.5 million Operating Partnership
Units at an approximate 31% premium to yesterday's closing
price
- In connection with this acquisition, Ashford Inc. has committed
to provide Ashford Trust with $5
million under the terms of the Enhanced Return Funding
Program ("ERFP")
Ashford Hospitality Trust, Inc. (NYSE: AHT) ("Ashford
Trust" or the "Company") today announced that it has completed the
acquisition of the 178-room Hilton Santa Cruz/Scotts Valley in Santa Cruz, California (the "Property") for
$50 million. To fund the
acquisition the Company used cash on its balance sheet and issued
as consideration to the seller approximately 1.5 million
Operating Partnership Units valued at $7.00 per unit, a premium of approximately 31% to
yesterday's closing price. The Company also assumed a non-recourse
mortgage loan at closing with a current balance of approximately
$25.3 million. The loan matures in
March 2025 and has a fixed interest
rate of 4.7%.
Located in Santa Cruz,
California, the Property is the only full-service,
Hilton-branded asset in the Santa
Cruz market. With its strong brand affiliation and
exceptional amenities, the Property is well-positioned in a lodging
market with very high barriers to entry. The Property is proximate
to Silicon Valley, home to many of the world's largest and
fastest-growing technology companies, and is part of the greater
San Francisco Bay Area. The Hilton Santa Cruz/Scotts Valley benefits from the business
transient and group demand generated by the region's economic
expansion. Additionally, leisure demand is attracted to the hotel's
desirable location near the iconic Santa Cruz Beach Boardwalk, the
redwood forests in the Santa Cruz Mountains, and the Monterey Bay
National Marine Sanctuary.
![The Hilton Santa Cruz/Scotts Valley Hotel The Hilton Santa Cruz/Scotts Valley Hotel](https://mma.prnewswire.com/media/827213/Hilton_Santa_Cruz.jpg)
The Hilton Santa Cruz/Scotts
Valley opened in 1999 and has 178 spacious rooms, including
21 suites. The Property also offers a broad range of amenities,
including the full-service Stonehouse Bar & Grill, 7,900 sq.
ft. of flexible meeting space, an outdoor pool, fitness center,
business center, gift shop and guest laundry facility. The Property
is in excellent physical condition after having received over
$7 million in capital improvements
during the 2016-2017 period. Post-closing, the Property will
be managed by Remington Lodging.
Inclusive of the funds provided by Ashford Inc. under the ERFP,
and assuming the Ashford Inc. funding occurred at
closing1, the adjusted net purchase price equates to
approximately $253,000 per key and
represents, as of December 31, 2018,
a trailing 12-month capitalization rate of 8.7% on hotel net
operating income of $3.9 million and
a trailing 12-month 10.2x Hotel EBITDA multiple, according to the
Company's preliminary estimates, based on unaudited operating
financial data provided by the seller. The Company currently
forecasts the five-year, leverage-neutral IRR on this investment to
be approximately 22%2 based upon various
underwriting, pricing, and timing assumptions, which are subject to
change, and include among other factors, property level mortgage
financing, equity investment, and ERFP funding. On a trailing
12-month basis as of December 31,
2018, the Property achieved RevPAR of $158, with 85% occupancy and an average daily
rate (ADR) of $187, according to
unaudited operating financial data provided by the seller. A
reconciliation of non-GAAP financial measures is included in the
financial table below.
Ashford Trust has now utilized or received commitments totaling
$40.6 million of capital since the
commencement of the Enhanced Return Funding Program related to the
acquisition of Hilton Alexandria Old Town, La Posada de
Santa Fe, Embassy Suites New York
Midtown Manhattan, and the Hilton Santa Cruz/Scotts Valley.
This funding total equates to approximately 81% of the initial
pledged amount. These new hotel assets add geographic
diversity and a combined RevPAR of $170 for 2018, which is well in excess of the
Company's most recently reported portfolio RevPAR. The
Company expects to benefit from the ERFP funding which seeks to
reduce overall equity requirements and enhance investment
returns.
![The Hilton Santa Cruz/Scotts Valley Hotel Pool The Hilton Santa Cruz/Scotts Valley Hotel Pool](https://mma.prnewswire.com/media/827214/Hilton_Santa_Cruz_Pool.jpg)
"We are excited to complete the acquisition of another
high-quality, well-positioned asset that we believe will benefit
from the very strong and growing Silicon Valley/Bay Area economy,"
said Douglas A. Kessler, Ashford
Trust's President and Chief Executive Officer. "Additionally, we
are able to once again benefit from the competitive advantages
provided by our Enhanced Return Funding Program, which we expect to
significantly increase the returns for our shareholders. We are
pleased with the meaningful progress of our utilization of the ERFP
program to acquire these attractive assets, which should add value
to our portfolio."
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."
- ERFP funding did not occur upon acquisition but is expected to
be funded over time; therefore the forecasted internal rate of
return will depend upon the actual timing of ERFP funding.
- Assumes leverage-neutral property-level mortgage financing,
closing costs and funding of ERFP at end of year one.
Ashford
Hospitality Trust
|
Hilton Scotts
Valley
|
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 December 31,
2018
|
|
Hotel Net
Income
|
|
$
2.3
|
|
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|
|
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|
Adjustment:
|
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Depreciation and
amortization
|
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$
1.1
|
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Interest
expense
|
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$
1.1
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Hotel
EBITDA
|
|
$
4.4
|
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Adjustment:
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Capital
reserve
|
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$
(0.5)
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Hotel Net Operating
Income
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$
3.9
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(1) All
information in this table is based upon unaudited operating
financial data for the prior twelve month period ended December 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.
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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.