Ashford Pays $90M Cash for Key West Hotel

MIAMI—Ashford Hospitality Trust is acquiring the 142-room Pier House Resort and Caribbean Spa in Key West, FL for $90 million. Funded with cash on hand, the sale price equals $634,000 per key. The deal is expected to close within 15 days.

The purchase price of $90 million represents a trailing 12-month cap rate of 6.2% on net operating income. In 2012, the hotel achieved RevPAR of $275, with occupancy of 83% and an Average Daily Rate of $333.

“Aside from being the nation's second highest RevPAR market, Key West has not seen any new competitive supply in the last 17 years given that the Rate of Growth Ordinance presently sets extremely high barriers to any new hotel development in Monroe County,” says Monty J. Bennett, Ashford's chairman and CEO. “In particular, the Pier House Resort offered us a very unique opportunity, given its recent renovation, its prime location in Key West, and the significant operational synergies with Remington's existing presence in that market."

When the deal closes, Ashford plans to replace the property manager with Remington Lodging. Remington currently manages three hotels in Key West. These include the Southernmost House, Inn at Key West, and the Crowne Plaza La Concha Hotel, which Ashford also owns.

The Pier House Resort and Caribbean Spa was built in 1968. It located at the northern end of Duval Street in the heart of Key West on a six-acre compound with a private beach and immediate access to the Gulf of Mexico.

The hotel has 142 rooms including 119 guest rooms and 23 suites. It offers 40 waterfront facing rooms and suites, and standard guestrooms average 325 square feet, while the 23 suites average 710 square feet. The hotel also has 2,600 square feet of meeting space, a 10,000-square-foot spa with 10 treatment rooms, three food and beverage outlets including al fresco dining at HarborView Cafe and the renowned Chartroom bar, a full-service fitness facility and private dock for charter pick-ups. The hotel