REIT purchases Hilton Alexandria Old Town
Ashford Hospitality Trust announced it has reached a definitive agreement to acquire the 252-room Hilton Alexandria Old Town for $111 million.
The 252-room hotel includes almost 13,000 square feet of meeting and function space. It opened in 2000 and has undergone $9.6 million in renovations since 2013.
Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing in upscale, full-service hotels.
The acquisition marks the first that the REIT will benefit from a new financing program with Ashford Inc., an asset management company that serves as an adviser to the trust.
The REIT has entered into an “Enhanced Return Funding Program” with Ashford Inc. Under the two-year agreement, Ashford Inc. has agreed to fund 10 percent of the purchase price in hotel acquisitions, for up to an aggregate of $50 million. That can be increased to $100 million if both parties agree.
The company said in a statement it believes the program will provide a competitive advantage for the REIT in bidding on hotel acquisitions. In the Hilton Alexandria purchase, Ashford Inc. will provide the REIT with about $11.1 million of cash through the purchase of hotel furniture, fixtures and equipment.
“This anticipated purchase of the Hilton Alexandria is particularly attractive on its own merits, and we believe the returns for our shareholders should be significantly improved via the Enhanced Return Funding Program with Ashford Inc.,” Douglas A. Kessler, Ashford Trust’s president and CEO, said in a statement. “We expect this programmatic funding arrangement should increase stockholder value from the investments we make on future acquisitions, and believe this will provide a clear competitive advantage for us.”