Ashford signed a definitive agreement to acquire the project management business of privately-held Remington Holdings. The transaction, which is expected to close during the third quarter of 2018, is subject to approval by the company's stockholders and customary closing conditions.
"The proposed acquisition of Remington's high-margin project management business will immediately add scale, diversification and an enhanced competitive position in the hospitality industry while also expanding the breadth of services we offer to our managed REITs," Monty J. Bennett, Ashford's chairman and CEO, said in a statement. "With deep industry experience and long-term contracts in place, we believe this transaction represents a compelling opportunity for Ashford to diversify its earnings stream and, moving forward, the potential to expand business to other third-party clients."
Remington's project management division provides design, development and project management services for both Remington managed hotels as well as external partners. It provides project oversight, coordination, planning and execution of renovation, capital expenditure or ground-up development projects. Its operations are responsible for managing and implementing all capital improvements at Ashford Hospitality Trust and Ashford Hospitality Prime. Additionally, it has experience working with major hotel brands in areas of renovating, converting, developing or repositioning hotels. In 2017, Remington Project Management had revenues of approximately $29 million.
Under the terms of the agreement, the company will acquire Remington's project management business for a total transaction value of $203 million. Upon closing of the transaction, the sellers will have the right to nominate two directors to the company's board of directors. The transaction does not require a private letter ruling from the Internal Revenue Service.
Remington is currently owned by Monty J. Bennett and Archie Bennett, Jr., the company's chairman and CEO and his father. The company's board of directors, therefore, formed a special committee of independent and disinterested directors to analyze and negotiate the transaction on behalf of the company and deliver a recommendation to the company's board of directors with respect to the transaction.
The company's special committee was advised by Janney Montgomery Scott as financial advisor, and Norton Rose Fulbright US acted as its legal advisor. Robert W. Baird & Co. acted as Remington's financial advisor, and Baker Botts acted as Remington's legal advisor.
Upon the unanimous recommendation of the special committee, the independent and disinterested members of the company's board of directors unanimously approved the transaction and recommended its approval by the company's stockholders.
Ashford provides global asset management, investment management and related services to the real estate and hospitality sectors.