8-K: Ashford Hospitality Trust Announces Sale of Courtyard Boston Downtown for $123 Million

Ashford Hospitality Trust has agreed to sell the Courtyard Boston Downtown for $123 million, with the sale expected to close in January 2025.

Summary

• Ashford Hospitality Trust has entered into a definitive agreement to sell the 315-room Courtyard Boston Downtown for $123 million, or $390,500 per key.
• The sale is anticipated to be finalized in January 2025, subject to standard closing conditions.
• The sale price represents a 5.9% capitalization rate on net operating income for the trailing twelve months ended September 30, 2024, after adjusting for anticipated capital expenditures.
• Without adjusting for capital expenditures, the sale price represents a 6.9% capitalization rate on net operating income for the same period.
• The sale price also represents a 14.3x Hotel EBITDA multiple when adjusted for capital expenditures, and a 12.3x Hotel EBITDA multiple without the adjustment.
• The company has not provided any assurances that the sale will be completed on these terms or at all.

Sentiment

Score: 7

Explanation: The sentiment is positive due to the sale at an attractive cap rate and the deleveraging of debt, but tempered by the lack of guarantee of completion and the forward-looking statements.

Positives

• The sale is expected to deleverage the company's BAML Highland Pool loan.
• The sale will result in significant capital expenditure savings.
• The company is encouraged by improved sentiment in the transaction market.
• The sale price represents an attractive cap rate.

Negatives

• The company provides no assurances that the sale will be completed on these terms or at all.
• The financial information presented is based on unaudited data and could change.

Risks

• The sale is subject to normal closing conditions, and there is no guarantee it will be completed.
• The company's forward-looking statements are based on current beliefs and assumptions, which could change.
• Changes in these beliefs and assumptions could cause actual results to vary materially from those expressed in forward-looking statements.
• The company's filings with the SEC contain more detailed discussions of risk factors.

Future Outlook

The company has several assets in the market at various stages of the sales process and is encouraged by the improved sentiment in the transaction market. The company will not publicly update or revise any forward-looking statements.

Management Comments

• We are pleased to announce the signed agreement to sell the Courtyard Boston Downtown at a very attractive cap rate, commented Stephen Zsigray, Ashford Trusts President and Chief Executive Officer.
• This sale will not only deleverage our BAML Highland Pool loan, but will also result in significant capital expenditure savings.
• We continue to have several assets in the market at various stages of the sales process and are encouraged by the improved sentiment we are seeing in the transaction market.

Industry Context

The sale of the Courtyard Boston Downtown reflects a broader trend of asset disposition within the hospitality REIT sector, as companies seek to optimize their portfolios and deleverage their balance sheets. The improved sentiment in the transaction market suggests a potential increase in similar activity.

Comparison to Industry Standards

• The capitalization rate of 5.9% (adjusted for capital expenditures) is within the range of recent hotel transactions, but the specific attractiveness depends on the location, condition, and brand of the property.
• The 14.3x Hotel EBITDA multiple (adjusted for capital expenditures) is a reasonable valuation for a full-service hotel in a major market like Boston, but it is important to compare this to similar transactions in the area.
• For example, recent sales of similar hotels in Boston have seen cap rates between 5.5% and 7.0% and EBITDA multiples between 12x and 15x, suggesting that this sale is within the expected range.
• Companies like Host Hotels & Resorts and Park Hotels & Resorts have also been active in asset sales, with similar cap rates and multiples depending on the specific properties.

Stakeholder Impact

• Shareholders may benefit from the deleveraging of the balance sheet and potential capital expenditure savings.
• Employees at the Courtyard Boston Downtown may experience changes in management or ownership.
• Customers may not experience any immediate changes, but the new ownership may have different operational strategies.
• Creditors may benefit from the reduction in debt.

Next Steps

• The sale is expected to be completed in January 2025, subject to normal closing conditions.
• The company will continue to market other assets for sale.

Key Dates

Keywords

hotel sale, real estate, Ashford Hospitality Trust, Courtyard Boston Downtown, capitalization rate, EBITDA, asset disposition, REIT