After months of discussion on how to best move its select-service hotels, Ashford Hospitality Trust seems to be making progress in that regard. And officials with the REIT say they’re close to becoming buyers again.
DALLAS—Officials with Ashford Hospitality Trust continue to chip away at their plans to unload the company’s portfolio of select-service hotels, closing the sale of a five-hotel portfolio and signing an agreement to sell three more properties in the second quarter.
Speaking during the company’s Q2 earnings conference call Friday, CEO and chairman Monty Bennett said the $142-million sale of the 1,396-room, five-hotel portfolio to Noble Investment Group; the $36-million agreement to sell two hotels in Palm Desert, California; and an agreement to sell the Hampton Inn Gainesville for $27 million indicate there is an appetite for the assets Ashford Hospitality Trust is attempting to sell.
“We believe these three transactions further validate the attractiveness of our select-service portfolio to potential buyers and the soundness of our refined sales process in divesting of noncore assets to ensure we maximize long-term value for our shareholders,” Bennett said.
The sales of the Palm Desert and Gainesville hotels are expected to close by the end of 2016.
Ashford officials have discussed plans to sell off the company’s select-service assets for much of the last year, and in recent months have shifted to selling the properties individually or in small groupings after trying to sell the company’s select-service assets as a single, large portfolio.
President Douglas Kessler said the company has been successful with its revised strategy despite a slowing transactions market. The company still must contend with shifting pricing expectations, though.
“We’re continuing to mind the market, and continuing to list assets according to our plan,” he said. “We remain hopeful that there will still be attractive pricing, but it is slowing down a little bit. And pricing has moved out somewhat.”
Bennett noted that the shift in pricing isn’t all bad news for the company, and if it continues to trend down, it might lure the real estate investment trust back into the market as a buyer.
“It’s certainly getting closer to an environment where some acquisitions might be attractive, depending on our stock price and the cost of capital,” Bennett said.
Ashford saw strong revenue-per-available-room growth for the second quarter, as comparable hotel RevPAR increased 4.9% year over year to $131.33, which was fueled by a 3.5% increase in average daily rate and a 1.4% increase in occupancy. Total comparable RevPAR for hotels not under renovation was up 5.7% for the quarter.
The real estate investment trust saw adjusted earnings before interest, taxes, depreciation and amortization increase 10.7% to $132.8 million for the quarter. The company had net income of $35.1 million in the quarter.
As of press time, the company’s stock was trading up 2.7% year to date.