ARA US Hospitality Trust enters deal to acquire 3 Marriott-branded US hotels

U.S. five dollar currency notes bills; taken September 2018.U.S. five dollar currency notes bills; taken September 2018.

ARA US Hospitality Trust has entered a deal to acquire a portfolio of three Marriott-branded upscale selective-service hotels in the U.S. from Concord Hospitality Enterprises for US$84.5 million, the REIT said in a filing to SGX Wednesday.

The acquisition, which will boost the portfolio to 41 hotels across 22 U.S. states, will be funded with a combination of debt and internal cash resources, the REIT said.

The hotels are located in Raleigh, North Carolina, and San Antonio, Texas, the filing said.

The AC by Marriott Raleigh North Hills property is the newest hotel in the North Hills area, which is a mixed-use development including more than a million square feet of offices space, located around 30 minutes to the airport, downtown Raleigh and Research Triangle Park, the filing said, adding several universities are also nearby.

The Courtyard San Antonio at The Rim and Residence Inn San Antonio at The Rim properties are located near each other in a San Antonio sub-market which includes residential, retail and office developments and leisure attractions, such as Six Flags Fiesta Texas amusement park, the REIT said. The University of Texas at San Antonio and U.S. Army training facility Camp Bullis are also nearby, it 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 superior revenue per available room (RevPAR) performance will contribute robust, stable cashflows to our bottom-line.” Lee Jin Yong, CEO of the REIT’s managers, said in the statement.

“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 U.S. The new relationship with Concord is expected to broaden our network to source future accretive acquisitions,” Lee said.

Concord, which is an approved hotel operator across major franchisers Marriott, Hilton, Hyatt and Intercontinental, manages 102 hotels in North America and has a current development pipeline of more than 25 hotels, the REIT said. Concord’s operational arm will continue to manage the three-hotel portfolio, the REIT said.

The properties’ net property income yield of 8.0 percent would have been expected to increase the trust’s pro forma distribution per stapled security (DPS) from its listing date on 9 May to 30 September by 8.1 percent to 3.38 U.S. cents, from 3.13 U.S. cents, assuming the acquisition had been completed on the listing date, the filing said.

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