Ashford Hospitality Trust has signed a definitive agreement to acquire the 232-room Memphis Marriott East hotel for $43.5 million in cash, or $187,500 per key. The acquisition is expected to close within the next 30 days. The property will subsequently be managed by Remington Lodging.
The purchase price of $43.5 million represents a trailing 12-month cap rate of 7.6 percent on net operating income and a trailing 11.6x EBITDA multiple. On a forward 12-month basis, the purchase price represents an estimated cap rate of 8.6% on net operating income and an estimated 10.3x forward EBITDA multiple.
"This transaction was particularly attractive given the hotel's prime location and market attributes, which include no new competitive supply projected for the submarket and stable corporate demand generators," said Monty J. Bennett, Ashford Trust's chairman and CEO. "Additionally, with the hotel's recent conversion to a full service Marriott, it has virtually no capex needs. After the installation of our affiliated property manager, Remington Lodging, we expect to achieve continued solid increases in RevPAR penetration as the property stabilizes."
Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing opportunistically in the hospitality industry across all segments and at all levels of the capital structure primarily within the United States.