Ashford Prime Explores Its Alternatives

DALLAS—Ashford Hospitality Prime Inc. said Friday that the independent directors of its board have begun exploring strategic alternatives, including a possible sale. The independent directors have retained Deutsche Bank Securities Inc. as their financial advisor to assist in this process.

“We do not believe Ashford Prime's current share price accurately reflects the company's intrinsic value,” says Monty J. Bennett, the REIT's chairman and CEO. “While we are confident in our strategic plan, we have concluded that we should consider all other opportunities to maximize shareholder value.” Shares were up 13% late Friday morning following Ashford Prime's announcement.

The strategic review has just begun, the company says, and there's no assurance that the company will enter into a transaction now or in the future. AHP says it will make no further comment regarding the review until it's completed.

With a focus on luxury hotels located in resort and gateway markets, AHP was spun off from Ashford Hospitality Trust in November 2013. This past June, AHT said it would exit the select-service business, putting a portfolio of 23 select-service properties on the market immediately, with plans to divest the remainder opportunistically in the future.

Initially, AHT considered spinning off the select-service business as it had done with AHP, Bennett said in an interview Thursday with REIT.com. Instead, it decided to sell its portfolio in this sector in order to focus on the upper-upscale segment.

“Our shareholders wanted clarity,” Bennett said in the REIT.com interview. He added that the decision marks a step toward creating well-defined, distinct strategies for the investment platforms operated by Ashford Inc., advisor to both AHT and AHP.

As for AHP, Zacks Equity Research appears to agree that it's undervalued in the stock market. A snapshot report earlier this month called the REIT's stock “overlooked” as well as oversold, and noted that over the preceding two months, “investors have seen two earnings estimate revisions move higher, compared with none lower, at least when looking at the key current-year time frame.”