Ashford Hospitality Trust to Acquire PREI’s Interest in $1.73B Highland Portfolio

DALLAS AND PARSIPPANY, N.J. — Ashford Hospitality Trust Inc. (NYSE: AHT) and Prudential Real Estate Investors (PREI) have signed a definitive agreement in which Ashford Trust will acquire the remaining 28.3 percent ownership interest of the 28-hotel Highland Hospitality portfolio from its joint venture partner, a value-add fund managed by PREI. Ashford Trust currently has a 71.7 percent ownership interest in the joint venture. The expected total transaction value is $1.73 billion, or $215,000 per key.

The portfolio includes 19 full-service hotels and nine select-service hotels with a concentration in major brands such as Hilton, Marriott, Hyatt and Starwood. The purchase of the PREI-managed fund’s interest will be made by a cash payment of $250.1 million.

Ashford Trust’s buyout will be funded with cash and is expected to be completed sometime during the first quarter of 2015, simultaneous with an anticipated refinancing of the Highland portfolio.

“We are very pleased to acquire the remaining ownership interest of this high-quality hotel portfolio whose performance has well exceeded our expectations,” says Monty Bennett, Ashford Trust’s chairman and CEO. “With the strong hotel fundamentals the industry is experiencing, we expect to benefit from further upside in this portfolio and believe this as a very attractive investment opportunity. Looking ahead, we intend to continue to work to maximize our investment in the portfolio.”

Bennett is correct that the hotel industry is experiencing strong fundamentals. According to Smith Travel Research Inc. (STR Inc.), the U.S. hotel industry’s year-over-year occupancy rate increased by 2.5 percent to 58.7 percent as of the end of November. The industry’s average daily rate rose by 4.5 percent to $112.52 and revenue per available room increased 7.1 percent to $66.09 year-over-year as well.

The purchase price of the Highland portfolio represents a trailing 12-month cap rate of 6.9 percent on net operating income and a cap rate of 7.4 percent on net operating income on a forward 12-month basis.

Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing in the hotel and lodging industry in the United States. As of this writing, the REIT’s investment portfolio includes 114 hotels spanning 25,073 total rooms. Ashford’s portfolio includes One Ocean in Jacksonville, Ritz-Carlton Atlanta in Atlanta, The Churchill in Washington, D.C., Silversmith in Chicago and WorldQuest Resort in Orlando.

At the end of the third quarter, Dallas-based Ashford Trust had net working capital of $547 million. Ashford Inc. (NYSE MKT: AINC) will become the advisor on the remaining 28.3 percent of the Highland portfolio.

Ashford Hospitality Trust’s stock price closed Friday, Dec. 19 at $10.58 per share, up from $8.35 per share at this time last year.

Prudential Real Estate Investors is the global real estate investment business of Prudential Financial Inc. (NYSE: PRU). Parsippany-based PREI has more than 650 employees located in 20 cities around the world, and gross assets under management of $59.3 billion ($43.7 billion net) as of June 30, 2014.

— John Nelson

Content Partners
‣ Arbor Realty Trust
‣ Bohler
‣ Lee & Associates
‣ Lument
‣ NAI Global
‣ Northmarq
‣ Pavlov Media
‣ Walker & Dunlop

Subscribe to the newsletter

Webinars on Demand

Read the Digital Editions

Northeast Multifamily & Affordable Housing Business

Midwest Multifamily & Affordable Housing Business

Western Multifamily & Affordable Housing Business

Texas Multifamily & Affordable Housing Business

Southeast Multifamily & Affordable Housing Business

Heartland Real Estate Business

Northeast Real Estate Business

Southeast Real Estate Business

Texas Real Estate Business

Western Real Estate Business

Shopping Center Business

California Centers

Student Housing Business

Seniors Housing Business

Featured Properties