The sellers are affiliate partnerships of Oak Hill Capital Partners, the Blackstone Group and Interstate Hotels & Resorts Inc. The properties are the 263-room Embassy Suites Philadelphia Airport; 249-room Embassy Suites in Walnut Creek, CA; 300-room Hilton Minneapolis Airport in Bloomington, MN; 375-room Sheraton in Anchorage; 260-room Sheraton San Diego Mission Valley in San Diego; 323-room Marriott in Trumbull, CT; and 234-room Sheraton in Iowa City, IA. When the deal closes, management will shift across the board from the Arlington, VA-based Interstate to Dallas-based Remington Lodging, an Ashford Hospitality sister company.
In this morning's press release, the Dallas-based Ashford's executive team says the purchase price represents a trailing 12-month cap rate of 6% on net operating income, a 7.5% EBITDA yield and 13.4 multiple on EBITDA. The plan is to invest another $40 million into upgrades in the coming year, according to the release. The Ashford team will use proceeds from July's follow-on offering and property-level financing to make the close.
"The renovations should position the properties for significant RevPAR penetration gains and closer attention to operating expenses should result in substantial improvement in operating margin flow-through once the renovations are completed," Monty Bennett, Ashford president and CEO, says in the release. But the plan doesn't stop there: Bennett's statement says "other strategic opportunities" are being weighed, including re-branding. The Ashford team, en route to Phoenix for the annual hospitality confab, was unavailable for comment about the deal prior to publication.
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