ASHFORD HOSPITALITY TRUST ANNOUNCES SALE OF ADDITIONAL SELECT-SERVICE HOTELS

Rhea-AI Summary

Ashford Hospitality Trust (AHT) has announced the sale of two select-service hotels, the 90-room SpringHill Suites and the 86-room Fairfield Inn in Kennesaw, Georgia, for $17.5 million.

The sale price reflects a 4.8% capitalization rate on the trailing 12-month net operating income through April 2024. The properties were carrying a mortgage loan with an outstanding balance of roughly $10.8 million.

Proceeds from the sale will be used for general corporate purposes, including the pay down of strategic financing.

Positive

• Sale of properties for $17.5 million.
• 4.8% capitalization rate on trailing 12-month net operating income.
• Proceeds to be used for paying down strategic financing.

Negative

• Remaining proceeds after mortgage loan payoff not specified.

Insights

Financial Analyst

Ashford Hospitality Trust (AHT) has successfully sold two select-service hotels in Kennesaw, Georgia, for $17.5 million. This sale contributed to a 4.8% capitalization rate on the trailing 12-month net operating income. Capitalization rate, or cap rate, is a metric used to assess the return on investment for a real estate asset. Generally, a lower cap rate indicates a higher value, but it also means lower potential returns.

The outstanding mortgage on these properties was around $10.8 million. This means that after paying off the mortgage, Ashford Trust is left with about $6.7 million in proceeds. This sum will be used for general corporate purposes, including reducing the Company's strategic financing. For investors, this transaction demonstrates the company's active steps in optimizing its portfolio and managing its debt. The immediate benefit is the reduction in interest expenses, but the long-term benefits would be more strategic reallocation of funds into potentially higher-yield investments.

Given the specific details disclosed, the financial health of Ashford Trust seems to be positively impacted in the short term. Investors should consider this as a positive signal of the company's financial management and operational efficiency.

Real Estate Market Analyst

The sale of the SpringHill Suites and Fairfield Inn in Kennesaw, Georgia, points to Ashford Hospitality Trust's strategic shift towards focusing on its core investments in upper-upscale, full-service hotels. Select-service hotels often offer fewer amenities compared to full-service hotels, which can lead to lower operating costs but also generally lower revenue streams. By divesting these assets, Ashford Trust may be seeking to concentrate on higher-margin properties that align more closely with their expertise and long-term business model.

From a market perspective, the cap rate of 4.8% is fairly attractive, indicating strong market demand for hospitality properties, even in the select-service segment. This sale helps Ashford to streamline its portfolio, focusing resources on more profitable and capital-intensive assets that could yield better long-term returns.

For investors, this sale reinforces Ashford Trust’s commitment to strategic asset management, potentially enhancing the overall portfolio quality and future income stability.

DALLAS, June 13, 2024 /PRNewswire/ -- Ashford Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust" or the "Company") today announced that it has closed on the sale of the 90-room SpringHill Suites and the 86-room Fairfield Inn located in Kennesaw, Georgia for $17.5 million.  The sale price represented a 4.8% capitalization rate on trailing 12-month net operating income through April 2024.  The hotels were encumbered with a mortgage loan that had an outstanding balance of approximately $10.8 million.  All remaining proceeds from the sale will be used for general corporate purposes, including the pay down of the Company's strategic financing.

Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing predominantly in upper upscale, full-service hotels.

Forward-Looking Statements

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release include, among others, statements about the Company's strategy and future plans. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," "could," "plan," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside of Ashford Trust's control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: our ability to raise sufficient capital to pay off our strategic financing; our ability to repay, refinance, or restructure our debt and the debt of certain of our subsidiaries; anticipated or expected purchases or sales of assets; our projected operating results; completion of any pending transactions; our understanding of our competition; market trends; projected capital expenditures; the impact of technology on our operations and business; general volatility of the capital markets and the market price of our common stock and preferred stock; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the markets in which we operate, interest rates or the general economy; and the degree and nature of our competition. These and other risk factors are more fully discussed in Ashford Trust's filings with the Securities and Exchange Commission.

The forward-looking statements included in this press release are made only as of the date of this press release. Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks when you make an investment decision concerning our securities. Investors should not place undue reliance on these forward-looking statements. The Company can give no assurance that these forward-looking statements will be attained or that any deviation will not occur. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations, or otherwise, except to the extent required by law.

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SOURCE Ashford Hospitality Trust, Inc.

FAQ

What hotels did Ashford Hospitality Trust sell in June 2024?

Ashford Hospitality Trust sold the 90-room SpringHill Suites and the 86-room Fairfield Inn in Kennesaw, Georgia.

How much did Ashford Hospitality Trust sell the hotels for?

The hotels were sold for $17.5 million.

What is the capitalization rate for the Ashford Hospitality Trust hotel sale?

The sale represented a 4.8% capitalization rate on the trailing 12-month net operating income through April 2024.

What were the mortgage loan details for the sold hotels by Ashford Hospitality Trust?

The hotels had a mortgage loan with an outstanding balance of approximately $10.8 million.

How will the proceeds from the sale be used by Ashford Hospitality Trust?

The proceeds will be used for general corporate purposes, including the pay down of strategic financing.