Officials with Ashford Hospitality Trust said they’re looking at “strategic alternatives” to drive the maximum value from selling a portfolio of select-service hotels.
DALLAS—Ashford Hospitality Trust officials continue to review options for the sale of a portfolio of select-service hotels identified as “noncore” properties.
The company has been discussing plans to sell the hotels for roughly two years, but during the company’s second quarter earnings call with investors, President and CEO Douglas Kessler said they’re being purposefully deliberate to maximize value.
“We’re open to evaluate a variety of alternatives, and we will continue to do so until we come across the best outcome for shareholders,” he said.
Analysts asked Kessler if he views today as the best possible time to sell the hotels, possibly as a package, because of how favorable debt markets are right now. He said that is a factor, but they’re going to be deliberate.
“You’re right debt markets are very attractive today, and that should enhance value across most real estate,” he said. “That’s the grease that helps with valuation metrics. It brings more buyers into market seeking better returns. We have a great portfolio and want to find an accretive solution and do so in way that enables the best outcome for (the) portfolio.”
During the quarter, the company sold the 495-room Crowne Plaza Atlanta Perimeter at Ravinia for $88.7 million.
• Click here for more Q2 2017 earnings coverage.
Kessler noted the capital raised by selling likely would be recycled to purchase the upper upscale full-service hotels Ashford will focus on going forward.
He noted the company won’t make purchases just for the sake of buying.
“We’ve been disciplined in not acquiring much,” he said. That shows the company’s “good judgment on transactions and utilizing capital.”
Ashford spent much of the first half of 2017 making a bid to take over FelCor Lodging Trust, a company that has since committed to selling to RLJ Lodging Trust. Analysts asked if there is any chance of pursuing some other large-scale transaction.
“We have a history of performing well both with single-asset acquisitions, portfolios and entities,” he said. “We’ll always keep an eye open for the most accretive utilization of cash.”
Comparable revenue-per-available-room for all of the company’s hotels was up 0.5% year over year for the second quarter to $134.11. That number was dragged down by renovations across the company’s portfolio. RevPAR for hotels not under renovation was up 1.4% for the quarter to $134.59.
Adjusted earnings before interest, taxes, depreciation and amortization was $125.5 million for the quarter, and the company posted a net loss for the quarter of $772,000.
As of press time, the company’s stock was trading at $6.26 a share, down 19.3% year to date. The Baird/STR Hotel Stock Index is up 24.4% for the same period.
Asked about his company’s stock price, which is lower than analysts would expect given the valuation of Ashford’s assets, Kessler pointed to Ashford’s pursuit of FelCor as one reason.
“At the beginning of the year, we attempted something strategic, and it didn’t work out the way we wanted, but we’ve still posted numbers that are generally in line and in some cases are better than the rest of the industry,” he said.