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Ashford Hospitality Joint Venture Acquires Highland Hospitality Portfolio for $1.3 Billion

DALLAS--March 2011-- Ashford Hospitality Trust, Inc. (NYSE: AHT):

Portfolio and Transaction Highlights

  • Includes 19 full-service hotels and nine select-service hotels Concentration in major brands such as Hilton, Marriott, Hyatt and Starwood Expands
  • Ashford’s presence in major markets such as Boston and Washington, D.C.
  • Pricing equals $158,000 per key and 13.4x EBITDA multiple for 2010
  • Ashford’s joint venture contribution includes $150 million of cash and $786 million of assumed debt for a 71.74% interest
  • Additional potential growth available with current NOI 36% below peak levels and new management for 17 of the hotels
  • Ashford is the second largest lodging REIT at 26,411 rooms
  • The Highland hotels achieved a 2010 EBITDA flow of 18% while Ashford’s portfolio had an EBITDA flow of 104%
  • Ashford Hospitality Trust, Inc. (NYSE: AHT) today announced it has formed a new joint venture with an institutional partner to take ownership of the 28-hotel Highland Hospitality portfolio. The acquisition and restructuring were completed through a consensual foreclosure for total consideration of $1.277 billion.

    Transaction Details

    The total consideration equates to a purchase price of $158,000 per key compared with $244,000 per key before capital improvement funding when the portfolio was acquired in 2007 in a privatization of publicly traded Highland Hospitality. Based on 2010 results, the purchase price equates to an EBITDA multiple of 13.4x and a capitalization rate of 6.1% utilizing NOI that is approximately 36% below its peak levels.

    The portfolio’s total revenues for 2010 grew 2.7% from 2009, compared to Ashford’s existing portfolio which grew 1.1% in 2010. Ashford’s existing portfolio had 104% EBITDA flow in 2010 while the new portfolio had only 18% flow. Ashford currently trades at a 2010 EBITDA multiple of 15.6x based on its closing price yesterday. Highland Hospitality originally paid $150,000 per key before capital improvement funding for the portfolio from 2003 to 2007.

    At closing, Ashford invested $150 million and will own 71.74% of the joint venture. The new money investment from Ashford and the institutional partner was utilized to reduce debt and to fund projected capital expenditures. Ashford funded its contribution from available cash. From the total new money investment a $32 million reserve was set aside at closing to be used for owner funded capital expenditures. Ashford’s 71.74% ownership interest partially reflects previous investments made by Ashford.

    The joint venture worked out a consensual restructuring with the existing senior lenders. The existing senior lenders will provide $530 million of first mortgage three-year financing with two one-year extension options on 25 of the hotels and the joint venture assumed first mortgage financing of $146 million on three of the hotels with approximately two years remaining until maturity. Additionally certain lenders will provide $419 million of mezzanine financing that will cover all 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% based upon the current forward LIBOR curve.

    Monty Bennett, CEO of Ashford, noted, “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 a substantial opportunity to improve the hotels’ performance with an aggressive asset management strategy similar to what we have accomplished with our existing hotels.”

    Portfolio Composition

    The portfolio is mostly comprised of full-service, upper-upscale and luxury hotels that generate 67% of 2010 EBITDA. These 17 hotels have 5,684 rooms and include brands such as Ritz-Carlton, Marriott, Hilton, Hyatt, Renaissance, Sheraton and Westin. The remaining 11 hotels have 2,400 rooms and include brands such as Crowne Plaza, Hilton Garden Inn, Courtyard, Residence Inn and Hampton Inn. There are also three independent hotels. For 2010, the portfolio’s RevPAR increased 3.7% to $91.91 with occupancy at 69.4% and ADR at $132.48, and total hotel revenues were $386 million.

    Based on 2010 EBITDA, the hotels are 65% upper-upscale, 32% upscale, 2% luxury and 1% upper midscale; and 47% Marriott, 26% Hilton and 9% Hyatt. Geographic diversification by EBITDA includes 36% for South Atlantic, 29% for South Central, 17% for New England, 11% Middle Atlantic and 5% North Central.

    During the next 10 months the venture intends to invest approximately $43 million in a capital improvement program to upgrade these hotels. This program will be funded through existing and on-going reserves at the property level together with the $32 million set aside for owner funded capital improvements.

    Remington Lodging will manage 17 of the hotels, followed by 6 with Marriott, 2 each for Hyatt and McKibbon and 1 for Hilton. Ashford will asset manage the entire portfolio on behalf of the joint venture.

    Investor Conference Call

    Ashford Hospitality Trust, Inc. will conduct a conference call at 11:00 a.m. ET on Friday March 11, 2011, to discuss the transaction. The number to call for this teleconference is 212-231-2913. A seven-day replay of the conference call will be available by dialing 402-977-9140 and entering the confirmation number, 21513833.

    The Company will also provide an online simulcast and rebroadcast of its conference call. The live broadcast of Ashford's call will be available online at the Company's website at as well as on on March 11, 2011, beginning at 11:00 a.m. ET. The online replay will follow shortly after the call and continue for approximately one year.

    Ashford Hospitality Trust 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, including direct hotel investments, first mortgages, mezzanine loans and sale-leaseback transactions. Additional information can be found on the Company's website at

    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.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 or 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.

    Portfolio Listing


    Chain Scale
    Ritz-Carlton Atlanta Luxury Marriott Atlanta
    Hilton Tampa Westshore Upper-Upscale  

    Hilton Parsippany Upper-Upscale Hilton

    Hilton Boston Back Bay Upper-Upscale Hilton
    Hyatt Regency Savannah Upper-Upscale Hyatt

    Hyatt Regency Windwatch Upper-Upscale Hyatt
    Portsmouth Renaissance Upper-Upscale Marriott
    Norfolk/Va Beach

    Sugar Land Marriott Upper-Upscale Marriott

    Plaza San Antonio Marriott Upper-Upscale Marriott
    San Antonio
    DFW Airport Marriott Upper-Upscale Marriott
    Omaha Marriott Upper-Upscale Marriott
    Renaissance Palm Springs Upper-Upscale Marriott
    Palm Springs

    Nashville Renaissance Upper-Upscale Marriott

    The Churchill Upper-Upscale Other
    Washington DC
    The Melrose (DC) Upper-Upscale Other
    Washington DC
    Sheraton Annapolis Upper-Upscale Starwood  
    Baltimore MD

    Westin Princeton Upper-Upscale Starwood Trenton NJ

    Hilton Garden Inn Austin Upscale Hilton Austin TX

    Hilton Garden Inn BWI Airport Upscale Hilton Baltimore MD

    Hilton Garden Inn Virginia Beach  
    Upscale Hilton Norfolk/Va. Beach VA

    Crowne Plaza Ravinia Upscale IHG Atlanta GA
    Courtyard Boston Tremont Upscale  Marriott Boston MA
    Courtyard Denver Airport Upscale Marriott Denver CO
    Courtyard Gaithersburg Upscale Marriott Washington DC MD

    Courtyard Savannah Upscale Marriott Savannah GA
    Residence Inn Tampa Downtown Upscale Marriott Tampa FL

    Silversmith Upscale Other Chicago IL
    Hampton Inn Parsippany Upper Midscale Hilton NY/NJ NJ

    Source: Ashford Hospitality Trust, Inc.

    Ashford Hospitality Trust, Inc.
    Douglas Kessler, President, 972-490-9600
    Corporate Communications, Inc.
    Tripp Sullivan, 615-324-7335

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    Also See: Ashford Hospitality Completes Sale of Hilton Rye Town in Rye Town, New York for $35.5 million to an Investment Group Led by Lodging Capital Partners / March 2011

    Ashford Hospitality Completes Sale of JW Marriott San Francisco for $96.0 Million to an Affiliate of Thayer Lodging Group / Febraury 2011

    Ashford Hospitality and Special Servicer Mutually Agree to Transfer the 772-room Hyatt Regency Dearborn to Receivership / December 2009

    Ashford Hospitality Trust Sells Four Hotels for $148 Million; Represents a Price of Approximately $130,000 per Key / October 2008

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