Ashford Hospitality Trust announced that it has completed the previously-announced acquisition of the 142-room Pier House Resort and Caribbean Spa in Key West, Fla., for total consideration of $90 million in cash ($634,000 per key). Ashford funded the entire purchase price with cash on hand. The company is currently in the market evaluating property level debt financing for the acquisition.
The purchase price of $90 million represents a trailing 12-month cap rate of 6.2 percent on net operating income and an EBITDA multiple of 14.3x. After completing its operational synergy analysis assuming Remington was managing the hotel for the previous twelve months, the Company estimates that both net operating income and EBITDA would have been approximately 35 percent higher than the actual trailing 12-months. This equates to a pro forma trailing 12-month cap rate of 8.4% and a pro forma EBITDA multiple of 10.5x. In 2012, the hotel achieved RevPAR of $275, with occupancy of 83% and an Average Daily Rate of $333.
The Pier House Resort will be managed by Remington Lodging. Remington now manages four hotels in Key West. These include the Pier House Resort and Spa, the Southernmost House, the Inn at Key West and the Crowne Plaza La Concha Hotel, which is also owned by Ashford Hospitality Trust.
Monty J. Bennett , Ashford’s Chairman and Chief Executive Officer, commented, “The Pier House Resort acquisition demonstrates our ability to add a high RevPAR hotel to our portfolio in an attractive market. We are confident that our affiliated manager, Remington Lodging, will be able to realize significant revenue enhancement opportunities and cost savings by leveraging its existing presence in Key West.”
The Pier House Resort and Caribbean Spa was built in 1968. It has 142 rooms including 119 guest rooms and 23 suites. The hotel has 40 waterfront facing rooms and suites, and standard guestrooms average 325 square feet, while the 23 suites average 710 square feet. Additionally, the hotel offers 2,600 square feet of meeting space, a 10,000 square foot spa with 10 treatment rooms, three food and beverage outlets, a full-service fitness facility, and private dock for charter pick-ups. Ashford expects to incur minimal expenses related to capital improvements given a $12 million dollar renovation recently completed at the property.