Ashford Hospitality Trust has signed a definitive agreement
to acquire seven full-service, upper-upscale hotels totaling 2,004 rooms
for $267.2 million in cash ($133,333 per key) from a partnership of
affiliates of Oak Hill Capital Partners, The Blackstone Group and
Interstate Hotels and Resorts.The seven hotels include the 263-room Embassy Suites Philadelphia
Airport in Philadelphia, Pennsylvania, the 249-room Embassy Suites Walnut
Creek in Walnut Creek, California, the 300-room Hilton Minneapolis Airport
in Bloomington, Minnesota, the 375-room Sheraton Anchorage in Anchorage,
Alaska, the 260-room Sheraton San Diego Mission Valley in San Diego,
California, the 323-room Marriott Trumbull in Trumbull, Connecticut, and
the 234-room Sheraton Iowa City in Iowa City, Iowa.
  Ashford intends to invest approximately $40.0 million in revenue-
generating brand improvements during the next 12 months. The purchase price
represents a trailing 12-month cap rate of 6.0% on net operating income, an
EBITDA yield of 7.5% and a 13.4x EBITDA multiple. Ashford will fund the
acquisition with proceeds from its July 2006 follow-on offering along with
property level financing. Ashford will change management of the hotels from
an affiliate of Interstate Hotels and Resorts to an affiliate of Remington
Lodging. The acquisition is expected to close on or before December 7,
2006.
  Monty Bennett, President and CEO of Ashford Hospitality Trust, said,
“This portfolio of well-branded, full-service hotels presents an attractive
array of opportunities for Ashford to create value through renovations and
more aggressive management of the assets. The renovations should position
the properties for significant RevPAR penetration gains within their
competitive sets, while a focus on improving service and closer attention
to operating expenses should result in substantial improvement in operating
margin flow- through once the renovations are completed. Other strategic
opportunities to create value are also being explored, such as rebranding.
We believe that, with the proper physical upgrades and management, these
hotels will deliver returns consistent with our investment thresholds. We
find the markets, brands, initial value, and upside opportunity to be very
attractive.”
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