DALLAS — Dallas-based Ashford Hospitality Trust has formed a joint venture with an institutional partner to acquire the 28-hotel Highland Hospitality portfolio. The purchase and restructuring were completed through a mutual foreclosure for a total consideration of $1.277 billion.
The total consideration of the portfolio, which includes 19 full-service hotels and nine select-service hotels, equates to an acquisition price of $158,000 per key. At closing, Ashford invested $150 million in the acquisition and will own 71.74 percent of the portfolio.
Monty Bennett, CEO of Ashford, stated in a company release, “We are pleased to complete this strategic and accretive transaction. Of all the hotel transactions we have seen completed, we believe it would be hard to match the many benefits of this investment. We believe there is substantial opportunity to improve the hotels' performance with an aggressive asset management strategy similar to what we have accomplished with our existing hotels.”
The 8,084-room portfolio consists of a variety of hotel brands, including Ritz-Carlton, Marriott, Hilton, Hyatt, Renaissance, Sheraton and Westin, scattered across Georgia, Florida, New Jersey, Massachusetts, New York, Virginia, Texas, Nebraska, California, Tennessee, Washington, D.C., Maryland and Illinois. Remington Lodging will manage 17 of the hotels, with Marriott managing six hotels, Hyatt and McKibbon each managing two properties, and Hilton managing one hotel. Ashford will asset manage the portfolio on behalf of the joint venture.
The joint venture agreed on a mutual restructuring with the properties' existing lenders. The existing senior lenders will provide $530 million of first mortgage, 3-year financing with two 1-year extension options for 25 of the hotels and the joint venture will assume first mortgage financing of $146 million on three of the hotels with approximately 2 years remaining until maturity. In addition, some lenders will provide $419 million in mezzanine financing that will cover the 28 hotels. The structure provides for fixed and floating rates with LIBOR floors and spreads for various tranches with an anticipated first year interest rate of 5.25 percent based upon the current forward LIBOR curve.
— Amy Bigley