DALLAS--Ashford Hospitality Trust Inc. has announced the acquisition of the remaining 28.26 percent ownership interest of the Highland Hospitality portfolio from its joint venture partner, a value-add fund managed by Prudential Real Estate Investors.

The purchase price of $250.1 million was paid in cash and funded by the concurrent refinancing of 24 hotels in the portfolio as well as proceeds from the REIT's recent equity offering. 

The 28-hotel Highland Hospitality portfolio includes 19 full-service hotels and 9 select-service hotels with a concentration in major brands such as Hilton, Marriott, Hyatt and Starwood. The total transaction value was $1.735 billion ($215,000 per key). On a forward 12-month basis, the purchase price represents an expected cap rate of 7.4 percent on net operating income and an expected 11.6x EBITDA multiple. 

In connection with the transaction, the company has refinanced 24 of the 28 hotels in the Highland portfolio with a new $1.07 billion non-recourse mortgage loan. The new financing has a two-year initial term with four, one-year extension options, subject to the satisfaction of certain conditions. The loan is interest only and provides for a floating interest rate of LIBOR + 4.39 percent, with no LIBOR floor. It replaces financing with a balance of approximately $908 million which resulted in net proceeds of approximately $200 million after closing costs and reserves including the return to the company of approximately $80 million of reserves held by the previous lender.

"This transaction represents substantial strategic value for us in several respects,” Monty J. Bennett, Ashford Trust's chairman and CEO, said in a release. “Since acquiring a majority interest in the Highland Portfolio almost four years ago, these high-quality assets have significantly exceeded our original expectations. Going forward, we continue to see further upside potential in this portfolio given the value-creating initiatives we have implemented as well as the favorable conditions that persist in the lodging industry. "

Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing opportunistically in the hospitality industry across all segments and at all levels of the capital structure primarily within the United States.

Reps with the REIT did not return a request for comment by press time.