Ashford Hospitality Trust Inc.
) (Ashford Trust) has decided to spin off a cluster of its
high-end hotel properties as Ashford Hospitality Prime Inc.
(Ashford Prime). These properties, consisting of 8 hotels
generate high revenue per available room (RevPAR) and comprise
3,146 rooms in total of which 2,912 rooms are owned.
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Ashford Prime plans to operate as a real estate investment trust
(REIT) and file for its listing on the New York Stock Exchange
under the symbol "AHP." These high-end hotels are spread in key
markets across the U.S. and generated RevPAR of $140 in 2012
compared to the remaining of Ashford Trust's 115 hotels' RevPAR
of $95 in 2012.
The list includes biggies like Marriott Plano Legacy Town Center
in Plano, Texas, Courtyard San Francisco Downtown and The Capital
Hilton in Washington, DC. The list also boasts other high-end
hotels located in Seattle, Philadelphia and Tampa.
In particular, Ashford Trust will spin off its 80% ownership
stake in this high-end portfolio and the company has already
received the board of directors' nod. As a result, in the form of
a taxable special distribution, Ashford Trust's common
stockholders will receive common stock in the newly formed
Ashford Prime Inc. This distribution is expected to occur toward
the end of the third quarter.
The stockholders of Ashford Trust who will receive stock in
Ashford Prime stand to benefit from this deal with Ashford Prime
targeting investments in high-end properties that would help in
generating RevPAR at least twice the national average (around
$130 and higher).
Moreover, Ashford Prime plans to operate at a lower leverage
level that would help tap opportunistic acquisitions and
investments. On the other hand, post spin-off the leverage level
of Ashford Trust is projected to lessen to some extent.
Ashford Trust currently has a Zacks Rank #5 (Strong Sell).
However, a number of REITs that are performing well and deserve a
Sunstone Hotel Investors Inc.
), both carrying a Zacks Rank #1 (Strong Buy) as well as
) that has a Zacks Rank #2 (Buy).