EX-99.1 2 d45530exv99w1.htm PRESS RELEASE exv99w1
 

(ASHFORD LOGO)
     
The premier capital provider to the hospitality industry TM
  NEWS RELEASE
         
Contact:
  Douglas Kessler   Tripp Sullivan
 
  Chief Operating Officer and Head of Acquisitions   Corporate Communications, Inc.
 
  (972) 490-9600   (615) 254-3376
ASHFORD HOSPITALITY TRUST COMPLETES $2.4 BILLION ACQUISITION
OF 51-HOTEL PORTFOLIO
Acquisition Highlights:
à   Comprised of 24 full-service, upper-upscale hotels and 27 premium select-service hotels in 31 markets across 18 states, the District of Columbia and Canada
 
à   Increases portfolio allocation in premium branded upper-upscale assets in major metropolitan and coastal markets with above average RevPAR growth potential
 
à   Acquisition price implies a projected forward 12-month NOI cap rate of approximately 7.6% and an estimated forward EBITDA yield of 9.0%
 
à   Price per key of approximately $215,000 for full service hotels and $125,000 for select service hotels
 
à   High quality assets include: Marriott Seattle Waterfront, Capital Hilton, Hilton Costa Mesa, Hyatt Regency Montreal, Hilton Tucson El Conquistador, Marriott Legacy Center, Renaissance Tampa, and Hilton La Jolla Torrey Pines.
DALLAS — (April 12, 2007) — Ashford Hospitality Trust, Inc. (NYSE: AHT) announced it has completed the acquisition of a 51-hotel, 13,640-room (net after joint venture adjustment) hotel portfolio from CNL Hotels and Resorts for approximately $2.4 billion in total consideration ($177,000 per key).
Monty J. Bennett, President and CEO of Ashford Hospitality Trust, said, “This portfolio is an unparalleled investment opportunity and transformational event for Ashford. This accretive transaction concentrates our portfolio in major metropolitan and coastal markets with largely upper-upscale brands, while providing us with a larger platform to execute our portfolio management and internal growth strategies.
“To ensure that we extract the maximum value from this transaction, for the last several months we focused on integration efforts, fine-tuning the financing, implementing value-added asset management strategies and deleveraging our balance sheet. The transition will be smooth with the added staff mainly in our accounting and asset management areas, and we anticipate being at the lower end of the $12-16 million range we had previously projected for our incremental G&A. Continuous negotiations on the financing resulted in even more flexible terms and lower costs. We made substantial progress on several value added strategies including JV buyouts and refinancing along with restructuring of management agreements to increase EBITDA. We are well on our way to accomplishing our deleveraging goals with planned asset sales totaling approximately $570 million in two phases and potential joint venture discussions.”
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14185 Dallas Parkway, Suite 1100, Dallas, TX 75254
  Phone: (972) 490-9600

 

 

AHT Acquires 51-Hotel Portfolio for $2.4 Billion
Page 2
April 12, 2007
Transaction Pricing
The estimated forward NOI cap rate is 7.6% and the EBITDA yield is 9.0% resulting in an 11.1x EBITDA multiple. On a trailing 12-month basis, the transaction’s NOI cap rate is 7.0% with an EBITDA yield of 8.4% equating to an 11.9x EBITDA multiple.
Transaction Funding
The transaction was funded with the following sources, all of which with the exception of assumed debt were provided by Wachovia Securities: $928.5 million of 10-year fixed CMBS at 5.95%; assumed debt from the existing joint ventures of approximately $436.9 million at an average interest rate of 6.08%; a $555.1 million pool of floating-rate CMBS at 165 basis points over LIBOR; $200 million of preferred equity at 250 basis points over LIBOR; a one-year (with 2 year extension), $325 million term loan at a rate of 150 basis points over LIBOR; and a three-year $200 million revolver that is priced between 155 to 195 basis point over LIBOR depending on the loan-to-value ratio. The blended all-in cost of capital on this financing is 6.49%.
Portfolio
The portfolio is comprised of full-service, upper-upscale hotels that account for approximately 65% of trailing EBITDA and premium select-service hotels totaling approximately 35% of trailing EBITDA. The 24 full-service, upper-upscale hotels contain 8,069 rooms with such hotels as the Marriott Seattle Waterfront, Marriott Legacy Center, Renaissance Tampa, Hyatt Regency Montreal, Hilton Tucson El Conquistador, Hilton La Jolla Torrey Pines, Hilton Costa Mesa, and Capital Hilton. The balance of the portfolio is comprised of 27 premium select-service hotels totaling 5,571 rooms. The well maintained hotels in the portfolio have an average age of 14.5 years. For 2006, the portfolio’s RevPAR was $99.51, resulting in a portfolio wide RevPAR yield penetration of approximately 116%. The 2006 ADR of $138 exceeds Ashford’s existing portfolio by 14%. The portfolio generated Gross Revenues of $689 million in 2006.
The transaction further concentrates Ashford’s overall portfolio EBITDA in higher growth markets and solidifies its position in the upper-upscale and upscale chain segments with 60% upper-upscale, 35% upscale, 4% midscale and 1% luxury pro forma for the acquisition. Ashford’s portfolio EBITDA by brand now includes the industry’s strongest performers with 50% in the Marriott brand family, 31% in Hilton, 8% in Hyatt and 6% in Starwood. Geographic diversification by EBITDA is also enhanced with 35% South Atlantic (of which 44% is in the Washington, D.C. area), 25% Pacific, 11% North Central, 10% South Central, 9% Mid-Atlantic, 7% Mountain, 2% New England and 1% Canada.
All but five of the 51 hotels are managed by their respective brands under long-term contracts. On a combined basis, Ashford has a total of eight different property managers with the largest being Marriott at 45% of the overall portfolio EBITDA, Remington Hotels at 22%, Hilton at 18% and Hyatt at 8%. Seventeen hotels in the acquisition are owned in joint ventures with ownership interests ranging from 70% to 89%.
Capital Expenditure Plan
Ashford expects to invest approximately $55 million in owner funded valued added capital improvements above the normal reserves for these assets in the first year to improve the physical product of the hotels and further enhance RevPAR yield penetration.
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* * * * *
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 web site at www.ahtreit.com.
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 expectation that deleveraging will occur and in the timeframe projected, 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.
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14185 Dallas Parkway, Suite 1100, Dallas, TX 75254
  Phone: (972) 490-9600

 

 

AHT Acquires 51-Hotel Portfolio for $2.4 Billion
Page 4
April 12, 2007
                                             
            # of     Year         Ownership     Owned  
Hotel   Location   State   Rooms     Built     Manager   %     Rooms  
Luxury & Upper Upscale Full Service Hotels:
                                            
Capital Hilton
   Washington DC   DC     544       1943     Hilton     75 %     408  
Hilton Birmingham Perimeter Park
   Birmingham   AL     205       1984     Hilton     100 %     205  
Hilton Costa Mesa
   Costa Mesa   CA     486       1983     Hilton     70 %     340  
Hilton Dallas — Lincoln Centre
   Dallas   TX     500       1976     Hilton     75 %     375  
Hilton La Jolla Torrey Pines
   La Jolla   CA     394       1989     Hilton     75 %     296  
Hilton Rye Town
   Rye Town   NY     446       1973     Hilton     75 %     335  
Hilton Suites Auburn Hills
   Auburn Hills   MI     224       1991     Hilton     70 %     157  
Hilton Tucson El Conquistador Golf Resort
   Tucson   AZ     428       1982     Hilton     75 %     321  
Miami Hilton Airport & Towers
   Miami   FL     500       1987     Hilton     70 %     350  
JW Marriott New Orleans
   New Orleans   LA     494       1984     Marriott     100 %     494  
Marriott Bridgewater
   Bridgewater   NJ     347       2002     Marriott     100 %     347  
Marriott BWI Airport
   Baltimore   MD     310       1988     Marriott     100 %     310  
Marriott Legacy Center
   Plano   TX     404       2001     Marriott     100 %     404  
Marriott Seattle Waterfront
   Seattle   WA     358       2003     Marriott     100 %     358  
Marriott Suites Market Center
   Dallas   TX     266       1998     Marriott     100 %     266  
Hyatt Regency Coral Gables
   Coral Gables   FL     242       1987     Hyatt     100 %     242  
Hyatt Regency Dearborn
   Detroit   MI     772       1976     Hyatt     100 %     772  
Hyatt Regency Montreal
   Montreal   CAN     607       1976     Hyatt     100 %     607  
Renaissance Tampa
   Tampa   FL     293       2004     Marriott     100 %     293  
Embassy Suites Crystal City — Reagan Airport
   Arlington   VA     267       1985     Hilton     75 %     200  
Embassy Suites Orlando Airport
   Orlando   FL     174       1999     Hilton     75 %     131  
Embassy Suites Portland — Downtown
   Portland   OR     276       1997     Hilton     70 %     193  
Embassy Suites Santa Clara — Silicon Valley
   Santa Clara   CA     257       1985     Hilton     75 %     193  
Doubletree Crystal City — Reagan Airport
   Arlington   VA     631       1973     Hilton     75 %     473  
Sub-Total
             9,425                           8,069  
 
                                            
Distinctive & Premium Select Service Hotels:
                                            
Courtyard Basking Ridge
   Basking Ridge   NJ     235       2001     Marriott     100 %     235  
Courtyard Edison
   Edison   NJ     146       2002     Interstate     100 %     146  

 

 

AHT Acquires 51-Hotel Portfolio for $2.4 Billion
Page 5
April 12, 2007
                                             
Courtyard Hartford — Manchester
   Manchester   CT     90       1999     Interstate     85 %     77  
Courtyard Legacy Park
   Plano   TX     153       1998     Marriott     100 %     153  
Courtyard Newark
   Newark   CA     181       2002     Marriott     100 %     181  
Courtyard Oakland Airport
   Oakland   CA     156       2001     Marriott     100 %     156  
Courtyard Old Town Scottsdale
   Scottsdale   AZ     180       1999     Marriott     100 %     180  
Courtyard Marriott Village LBV
   Orlando   FL     312       2000     Marriott     100 %     312  
Courtyard Philadelphia Downtown
   Philadelphia   PA     498       1999     Marriott     89 %     443  
Courtyard San Francisco Downtown
   San Francisco   CA     405       2001     Marriott     100 %     405  
Courtyard Seattle Downtown
   Seattle   WA     250       1999     Marriott     100 %     250  
Residence Inn Atlanta — Buckhead
   Atlanta   GA     150       1997     Interstate     100 %     150  
Residence Inn Atlanta Perimeter West
   Atlanta   GA     128       1987     Marriott     100 %     128  
Residence Inn Dallas Plano
   Plano   TX     126       1998     Marriott     100 %     126  
Residence Inn Hartford — Manchester
   Manchester   CT     96       2000     Interstate     85 %     82  
Residence Inn Kansas City
   Kansas City   MO     96       1987     Marriott     100 %     96  
Residence Inn Las Vegas
   Las Vegas   NV     256       1998     Marriott     100 %     256  
Residence Inn Newark
   Newark   CA     168       2002     Marriott     100 %     168  
Residence Inn Phoenix Airport
   Phoenix   AZ     200       1999     Marriott     100 %     200  
Residence Inn Torrance
   Torrance   CA     247       1984     Marriott     100 %     247  
SpringHill Suites Manhattan Beach
   Manhattan Beach   CA     164       2001     Marriott     100 %     164  
SpringHill Suites Marriott Village LBV
   Orlando   FL     400       2000     Marriott     100 %     400  
SpringHill Suites Philadelphia
   Plymouth Meeting   PA     199       2001     Marriott     100 %     199  
SpringHill Suites Richmond
   Glen Allen   VA     136       2001     Marriott     100 %     136  
Hampton Inn Houston Galleria
   Houston   TX     176       1995     Interstate     85 %     150  
Fairfield Inn Marriott Village LBV
   Orlando   FL     388       2000     Marriott     100 %     388  
TownePlace Suites Manhattan Beach
   Manhattan Beach   CA     144       2001     Marriott     100 %     144  
Sub-Total
             5,680                           5,571  
Total
             15,105                           13,640  
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