ARA US Hospitality Trust (“ARA H-Trust”) is pleased to announce that it has today entered into a conditional purchase and sales agreement to acquire a portfolio of three Marriott-branded upscale select-service hotels in the United States for US$84.5 million. The three freehold properties are located within the markets of Raleigh, North Carolina and San Antonio, Texas, that benefit from diversified demand from nearby corporations, universities and leisure attractions.
The accretive acquisition at a net property income yield of 8.0% is expected to increase ARA H-Trust’s pro forma distribution income from the listing date on 9 May 2019 to 30 September 2019 by US$1.4 million, translating to a rise in distribution per stapled security from 3.13 US cents to 3.38 US cents assuming the acquisition was completed on listing date. The acquisition will be funded primarily with debt and by internal cash resources. Following this acquisition, ARA H-Trust’s portfolio will grow to 41 hotels with 5,340 guest rooms geographically diversified throughout 22 states in the United States.
Mr Lee Jin Yong, the Chief Executive Officer of the Managers, said, “This acquisition demonstrates our ability to execute third-party transactions at an attractive yield in the world’s largest lodging market. We will continue to explore acquisition opportunities to further diversify our portfolio by location and by brand, and most importantly to enhance stapled securityholders’ returns.”
DBS Bank Ltd. (“DBS”) was the Sole Issue Manager for the Offering (the “Sole Issue Manager”). DBS, Oversea-Chinese Banking Corporation Limited and United Overseas Bank Limited were the Joint Financial Advisers and Joint Global Coordinators for the Offering (collectively, the “Joint Financial Advisers and Joint Global Coordinators”). DBS, Oversea-Chinese Banking Corporation Limited, United Overseas Bank Limited and Credit Suisse (Singapore) Limited were the Joint Bookrunners and Underwriters for the Offering (collectively, the “Joint Bookrunners and Underwriters”).
Mr Lee added, “We are excited with the addition of this high quality freehold portfolio which will broaden our earnings base with diversified and increased net property income. The portfolio has outperformed its competitive set recording RevPAR indices between 120% to 146%. The superior revenue per available room (RevPAR) performance will contribute robust, stable cashflows to our bottom-line. In addition, the acquisition will affiliate ARA H-Trust with Marriott, a leading global hotel brand, and Concord Hospitality, a well-regarded, experienced hotel developer and operator in the US. The new relationship with Concord is expected to broaden our network to source future accretive acquisitions.”
The portfolio consists of AC by Marriott Raleigh North Hills, Courtyard San Antonio at The Rim and Residence Inn San Antonio at The Rim.
AC by Marriott Raleigh North Hills is the newest hotel within the heart of Raleigh’s North Hills – one of Raleigh/Durham’s premier live-work-play destinations. North Hills is a mixed-use development that contains more than 1 million square feet of office space, with notable tenants such as PwC, KPMG and Bank of America, plus retail, entertainment, and residences. Universities around the area include North Carolina State University (35,000 students), Duke University (15,000 students) and University of North Carolina (29,000 students). It is also strategically located 20 to 30 minutes to the airport, downtown Raleigh, and the Research Triangle Park. The Research Triangle Park is one of the most prominent high-tech research and development parks in the United States and houses 200 companies (including IBM, SAS, GlaxoSmithKline, Cisco and Lenovo) with over 50,000 workers.
Courtyard San Antonio at The Rim and Residence Inn San Antonio at The Rim are located adjacent to each other in one of the most desirable submarkets in San Antonio. The local market features attractive residential, retail, office developments, as well as popular leisure attractions. Key demand drivers include Fortune 500 corporations (Valero, Nustar and USAA); Six Flags Fiesta Texas amusement park; The Rim, a 2.8 million square feet master development with retail, dining, and service amenities; the University of Texas at San Antonio (31,000 students); and Camp Bullis, a 28,000 acres US Army training facility with 6,000 employees and training throughput of over 170,000 annually.
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