DALLAS-Ashford Hospitality Trust announced plans to spin off an 80% ownership interest in an eight-hotel portfolio totaling 3,146 rooms (2,912 owned rooms) to stockholders of Ashford Trust common stock through a taxable special dividend. The dividend will be comprised of common stock in the new holding company, Ashford Hospitality Prime Inc.
The initial eight hotels are the Hilton La Jolla Torrey Pines, the Capital Hilton in Washington, D.C., Marriott Plano Legacy Town Center, Seattle Marriott Waterfront, Courtyard San Francisco Downtown, Courtyard Seattle Downtown, Courtyard Philadelphia Downtown, and Renaissance Tampa International Plaza. The dividend distribution will be made on a pro-rata basis to stockholders of Ashford's common stock at the end of Q3.
According to a press release from the Dallas-based REIT, the idea to spin off the portfolio has been pending for about a year and came about because Ashford Hospitality had two portfolios – a high-leverage one and a low-leverage one. The spinoff allows Ashford Prime to invest in high RevPAR hotels in mainly domestic and international gateway markets.
Ashford Prime will distinguish itself from Ashford Trust based on a more conservative capital structure and focused on higher RevPAR hotels located in both domestic and international markets. Ashford Prime will be externally advised by Ashford Hospitality Advisors LLC, which will be a subsidiary of Ashford Trust, pursuant to an advisory agreement. Ashford Trust's operating partnership will retain a 20% ownership interest in Ashford Prime's operating partnership.
Ashford Trust chairman and CEO Monty Bennett says Ashford Prime will focus mainly on luxury, upscale hotels anticipated to generate RevPAR at least twice the national average currently approximately $103 and higher. Ashford Trust, in the meantime, will continue to focus on all segments of the hospitality industry.
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