It's not definitive, but Ashford is evaluating an immediate pass of the 323-room Marriott at 180 Hawley Lane in Trumbull, CT and 234-room Sheraton at 210 S. Dubuque St. in Iowa City, Monty Bennett, president and CEO of the Dallas-based Ashford, confirms for GlobeSt.com. As the portfolio acquisition works toward fruition, Bennett says the team is reviewing the other flags' positioning in their markets to determine if a change is warranted as it fires up franchise negotiations in line with the pending sale. An Embassy Suites Hotels' flag flies over two hotels; Sheraton Hotels & Resorts has two more; and Hilton Hotels Corp. has one. He says "one or two" flags might be changing.
"They are all very strong brands," Bennett stresses. "We just want to look at their positioning and performance." He says the plan is to re-up franchises with 10-, 15- and 20-year terms for the suburban full-service hotels that will be kept. "The five that are left are in markets that we're happy with from a long-term standpoint," he explains.
A decision also is pending on the financing. Bennett says cash on hand and the REIT's credit line will be teamed with to-be-determined mortgage financing. The transaction is slated to close by Dec. 7.
Bennett says Ashford's buying at a 6% cap trailing rate, but "with stronger cost controls we are really buying on a 7% cap." Remington Lodging is taking over the reins from the Arlington, VA-based Interstate Hotels & Resorts Inc.
Ashford is buying inroads into all new markets. "There are several opportunities to add value," Bennett says about the purchase, which was courted to only a handful of hospitality investment groups.
The hotels were built in the mid- to late 1980s. Portfolio occupancy, RevPAR and the average daily room rates weren't readily available. Bennett says "we'll do the best we can" to maintain ADRs during a $40-million, one-year cap-ex plan, the bulk of which is aimed at the 375-room Sheraton at 401 E. 6th Ave. in Anchorage and 263-room Embassy Suites Philadelphia Airport at 9000 Bartram Ave. "After that, we'll push our ADR," Bennett adds. The portfolio also includes the 294-room Embassy Suites at 1345 Treat Blvd. in Walnut Creek, CA; 300-room Hilton Minneapolis Airport at 3800 E. 80th St. in Bloomington, MN; and 260-room Sheraton San Diego Mission Valley at 1433 Camino del Rio South in San Diego.
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