ARA US Hospitality Trust sells 4 hotels to Three Wall Capital
ARA US Hospitality Trust is selling a portfolio of four underperforming hotels in mid-sized US cities for $32.5m as the Singapore-listed REIT seeks to rebalance its portfolio in favor of higher-yielding core assets raised.
The 507-room portfolio includes four Hyatt Place hotels serving Birmingham, Alabama; Pittsburgh, Pennsylvania; and the Ohio cities of Cleveland and Cincinnati. The properties are located in weak submarkets with falling demand exacerbated by the COVID-19 pandemic, ARA H-Trust officials said Thursday. in a deposit with the Singapore Stock Exchange.
The cash sale of the portfolio to Three Wall Capital, a US investment group specializing in hotel properties, is expected to close in the third quarter of this year, with the price of $32.5 million representing a 3.2% premium against an independent market valuation. .
The divestment will free up capital for ARA H-Trust to potentially deploy towards asset management initiatives for core assets that will generate returns, profits and distributions for unitholders, Lee Jin Yong said. managing director of trust managers.
Lagging business trips
Formerly known as AmeriSuites, Hyatt Place is positioning itself as a limited-service offering for business travelers, competing in the same space as brands like Courtyard by Marriott and Hilton Garden Inn. A total of 27 of ARA H-Trust’s 41 hotels operate under the Hyatt Place brand.
The four hotels held for sale represented 4.4% of the total value of ARA H-Trust’s $722.6 million portfolio at the end of 2021. The disposal of the properties will increase the overall occupancy rate of the portfolio from 57.1% to 58.8% and will increase revenue per available room. to $66 from $64, trust managers said.
New York-based Three Wall Capital was founded in 2008 by Alan Kanders and has completed more than $1.5 billion in deals as a lead investor. The company’s portfolio consists of 65 hotels across the United States and Bermuda, including 58 extended stay properties.
Raviraj Dave and Michael Mao, directors of Kanders and Three Wall, are graduates of Cornell University’s hotel management school, as is Lee, the boss of ARA H-Trust, which is based in the United States. United.
ARA H-Trust in March announced the proposed sale of its sole Illinois state asset, Hyatt Place Chicago Itasca, to Puerto Rican company IHP Hospitality for $7.8 million. The 126-room hotel in a northwest suburb of Chicago is located 12 miles from O’Hare International Airport and 27 miles from downtown Chicago.
The 1996 property is one of the oldest and smallest assets in ARA H-Trust’s portfolio and is expected to require significant capital expenditure relative to its value over the next few years, managers said. The sale was expected to take place by the end of the second quarter.
In April, ARA H-Trust reported full-year 2021 revenue of $130.7 million, up 67.2% year-on-year as the portfolio saw a recovery in rates occupancy since the beginning of 2021 after the widespread distribution of COVID vaccines and the lifting of travel restrictions in the United States.
Gross operating profit more than tripled to $40.5 million in 2021 as cost-mitigation measures proved effective in containing an increase in operating expenses, officials said.