Ashford Hospitality Trust has entered into definitive agreements to sell two properties and has closed on the sales of two previously disclosed transactions.
The company has received strong interest from buyers on multiple assets, demonstrating the underlying value in its portfolio. These activities support the company's ongoing strategy to deleverage, increase liquidity and improve cash flow, according to the company.
"We continue to see depth in buyer interest across our portfolio result in strong asset valuations," President and CEO Stephen Zsigray said in a statement. "Strategic sales continue to be a core component of our plan to reduce leverage and improve cash flow via interest expense and capital expenditure relief. Proceeds from these transactions are primarily used to retire debt, positioning the Company for long-term value creation."
La Posada de Santa Fe Resort & Spa
The agreement for the 157-room La Posada de Santa Fe Resort & Spa is for $57.5 million or $364,000 per key. The sale is expected to be completed in March and is subject to normal closing conditions. The company provides no assurances that the sale will be completed on these terms or at all.
When adjusted for the company's anticipated capital expenditures of $18 million, the sale price represents a 5.9 percent capitalization rate on net operating income or a multiple of 15.1 times hotel EBITDA for the twelve months ended Dec. 31. Excluding the anticipated capital spend, the combined sale price represents a 7.8 percent capitalization rate on net operating income or a multiple of 11.5 times Hotel EBITDA for the twelve months ended Dec. 31.
Hilton St. Petersburg Bayfront
The agreement for the 333-room Hilton St. Petersburg Bayfront is for $96 million or $288,000 per key. The sale is expected to be completed in March and is subject to normal closing conditions. The company provides no assurances that the sale will be completed on these terms or at all.
When adjusted for the company's anticipated capital expenditures of $23 million, the sale price represents a 5.5 percent capitalization rate on net operating income or a multiple of 16.1 times Hotel EBITDA for the twelve months ended Dec. 31. Excluding the anticipated capital spend, the combined sale price represents a 6.8 percent capitalization rate on net operating income or a multiple of 13.0 times Hotel EBITDA for the twelve months ended Dec. 31.
Closed Transactions
Ashford Trust has closed on the previously announced sales of the Embassy Suites by Hilton Houston Near the Galleria and the Embassy Suites by Hilton Austin Arboretum, representing 300 rooms. These transactions generated $27 million in gross proceeds, or $90,000 per key.
When adjusted for the company's anticipated capital expenditures of $14.5 million, the sale price represents a 1.7 percent capitalization rate on net operating income or a multiple of 34.5 times hotel EBITDA for the twelve months ended Dec. 31. Excluding the anticipated capital spend, the combined sale price represents a 2.7 percent capitalization rate on net operating income or a multiple of 22.5 times Hotel EBITDA for the twelve months ended Dec. 31.
Together, these four sales are expected to contribute to more than $2 million in annual cash flow improvement and $55.5 million in future capital expenditure savings based on current mortgage interest rates.