ARA US Hospitality Trust (ARA H-Trust) has entered into a conditional purchase and sale agreement with Bacall Companies to divest Hyatt Place Pittsburgh Airport.

The asset is being sold off for a consideration of USD7.7 million.

It commenced operations in 1998 with 127 rooms, and is located on the southern side of Lincoln Highway off I-376.

The independent appraiser, Newmark Valuation & Advisory, valued the asset at USD7.7 million as at 31 August 2023.

ARA H-Trust has described the asset as the smallest within its portfolio, accounting for 1.0% of total valuation as at 31 December 2022.

The trust also opines that market room demand for where the asset operates was negative at a compounded annual growth rate of -7.3% from 2019 to 2022.

“Furthermore, the hotel is one of the older assets in our portfolio and will require sizable capital expenditure outlay relative to its value”, said the trust.

“Capital investment in this hotel is considered dilutive to distributable income. By selling this asset, the trust saves capital expenditure dollars that are better redeployed to higher performing assets in the portfolio”, it added.

The managers intend to use the net proceeds from the divestment in the near term to pare
down existing bank borrowings or for general working purposes.

ARA H-Trust was last done on the Singapore Exchange at USD0.285, which presently implies a distribution yield of 10.6% according to data on the Singapore REITs table.

By Shariffa Al-Habshee

Shariffa joined REITsWeek in 2017, and monitors Asia-Pacific REITs for the publication.