Ashford Hospitality Trust Achieves 1.3% Cap Rate on Strategic Hotel Sales

Ashford Hospitality Trust has completed the sale of two non-core hotel properties for a total of $33 million. The sales achieved a low capitalization rate of 1.3% post-capital expenditure adjustment. The transactions are part of the company's GRO AHT initiative, aiming to reduce leverage and enhance cash flow. Ashford plans to continue pursuing similar opportunistic sales to optimize its portfolio.

Ashford Hospitality Trust (NYSE: AHT) has completed the sale of two non-core hotel properties for a combined $33 million. The transactions include the Hilton Houston NASA Clear Lake for $27 million and the Residence Inn Evansville East for $6 million [1]. The sale achieved a low capitalization rate of 1.3% post-capital expenditure adjustment, suggesting these properties were underperforming assets requiring substantial future investments.

The strategic divestitures are part of Ashford's GRO AHT performance improvement initiative, which aims to reduce leverage and enhance cash flow. The company has indicated that these non-core asset dispositions align with their broader portfolio optimization strategy, rather than being isolated transactions [1].

The sale represents a significant step in Ashford's efforts to improve its financial position. By reducing overall leverage and enhancing coverage metrics on their recently extended MS 17 loan pool, the company is positioning itself for long-term portfolio health. The transactions also increase portfolio cash flow after debt service, demonstrating a commitment to financial discipline and strategic focus on the company's core upper upscale, full-service hotel portfolio [1].

Ashford plans to continue pursuing similar opportunistic sales to further optimize its portfolio. This approach signals a dual strategy of operational enhancements for retained properties and pruning underperforming assets that would drain capital resources. For investors, this represents a positive shift toward financial discipline and strategic focus, with management's willingness to divest properties at seemingly unfavorable multiples indicating a commitment to long-term portfolio health over short-term optics.

References:

[1] https://www.stocktitan.net/news/AHT/ashford-hospitality-trust-announces-strategic-portfolio-psfl55r1ua72.html