Ashford Reaches $437M in Asset Sales, 2008 Goal is $600M

With $148.2 million in asset sales for the third quarter, Dallas-based Ashford Hospitality Trust Inc. brought sales for the year to $437 million. The company plans to dispose of assets valued at approximately $600 million during 2008, through outright sales and joint ventures. Last year, the company sold 21 assets for $312 million. The $437 million total covers the sale of 10 properties and represents a price of approximately $133,000 per key, a 6.6 percent 12-month NOI cap rate and a 12.0x trailing 12-month EBITDA multiple. In a prepared statement about AHT’s asset sales strategy, president & CEO Monty Bennett said that funds from the dispositions are recycled into stock repurchases, capital preservation vehicles and debt payments. The third quarter sales, for example, paid off $112 million in mortgage debt. The AHT report accompanies a significant downturn in the hospitality industry. According to the FTSE NAREIT US Real Estate Index, stock prices for resort and hospitality REITs plummeted 43.96 percent between Oct. 1 and Oct. 27. For the year, the index shows a decline of 58.94 percent in the hospitality sector. On Oct. 8, Robert W. Baird downgraded 12 hotel REITs, while cautioning investors that RevPAR (revenue per available room) would likely decline between 3 and 5 percent next year because of decreased demand and increased supply. The downgrade moved AHT from “outperform” to “neutral,” citing risks posed by “substantial floating rate debt and higher leverage.” AHT owns or has ownership interest in 104 hotels and holds mortgages on nine hotels. The portfolio is mostly upper-upscale and upscale hotels, plus a handful of luxury, mid-scale and independent hotels. Investment strategies include direct investment, first mortgage loans, mezzanine lending, sale-leaseback transactions and stock buybacks. The company hedges its risks with a diversification program that includes chain scale, brand and geographic components. Since going public in August of 2003, AHT has sold assets valued at $892 million.