ARA US Hospitality Trust (ARA H-Trust) has entered into a purchase and sale agreement to divest a portfolio of four Hyatt Place hotels.
The hotels will be divested for a total consideration of USD32.5 million, which is a 3.2% premium over the latest market valuation.
The hotels are namely Hyatt Place Pittsburgh Cranberry located in Pennsylvania, Hyatt Place Birmingham Inverness located in Alabama, Hyatt Place Cincinnati Northeast and Hyatt Place Cleveland Independence located in Ohio.
According to ARA H-Trust, the hotels are non-core assets with declining historical performance.
The assets are also located in sub-markets with declining demand exacerbated by the COVID-19 pandemic, and where asset enhancement is not expected to boost cash flow yield in the future years, it added.
Furthermore, the assets are ranked in the bottom quartile in terms of historical performance in key performance metrics such revenue per available room (RevPAR).
The assets accounted for approximately 4.4% of the total portfolio value of ARA H-Trust as at 31 December 2021.
The sale is expected to take place in the third quarter of 2022.
Once settled, the divestment will reduce ARA H-Trust’s NAV per unit from to USD0.495 to USD0.355.
Proceeds from the divestment may be used to reduce existing bank borrowings, or be redeployed towards acquiring new accretive assets, said the trust.
ARA US H-Trust was last done on the Singapore Exchange at, which presently implies a distribution yield of 7.55% according to data on the Singapore REITs table.