Five-Hotel Portfolio Trades for $142M

Noble Investment Group of Atlanta has acquired a five-hotel portfolio from Ashford Hospitality Trust Inc.
Springhill Suites Lake Buena Vista, Orlando, Fla.

Springhill Suites Lake Buena Vista, Orlando, Fla.

DallasAshford Hospitality Trust Inc., a Dallas-based REIT, has agreed to sell to Noble Investment Group of Atlanta, a five-property, 1,396-key portfolio of select-service hotels for $142 million in cash, or $102,000 per key, Ashford announced earlier this week.

The five properties are:

  •  the 146-key Courtyard Edison in Edison, N.J.;
  •  the 150-key Residence Inn Buckhead in Atlanta;
  •  the 312-key Courtyard Lake Buena Vista,
  •  the 388-key Fairfield Inn Lake Buena Vista and
  •  the 400-key Springhill Suites Lake Buena Vista in metro Orlando, Fla.

The three Orlando properties are managed by Marriott, while the other two hotels are managed by Remington Lodging.

Neither Ashford nor Noble responded to Commercial Property Executive’s requests for additional information.

The purchase price, including projected capex to be invested by Noble, reportedly represents a trailing 12-month cap rate of 8.0 percent on NOI. On a trailing 12-month basis, the portfolio achieved RevPAR of $84, based on occupancy of 79 percent and an ADR of $106.

The portfolio has a debt balance of about $98 million, and Ashford expects its net proceeds to be approximately $37 million after debt repayment and transaction costs. Possible uses for these funds, according to Ashford, include net debt reduction, stock buybacks or the acquisition of full-service hotels.

The transaction is scheduled to close in the second quarter.

“We are pleased to announce this sale as it provides a positive first step in our announced strategy of divesting of our non-core, select-service assets,” Monty Bennett, Ashford chairman & CEO, said in a prepared statement.

Because of higher post-recession construction costs and stiffer lender requirements for investor equity, “select-service hotels in key primary and secondary markets comprise most new development with supply growth for other market segments remaining more muted,” according to a 2015 hotel sector report from JLL.

Image courtesy of Marriott International