ARA US Hospitality Trust has entered a deal to divest the Hyatt Place Chicago Itasca (HPCI) to IHP Hospitality for US$7.75 million in cash, the REIT said in a filing to SGX Thursday.
Independent valuer, JLL Valuation & Advisory Services LLC, valued the hotel at US$7.8 million as of end-December, with the sale price representing a 0.6 percent discount to the valuation, the filing said.
The HPCI is a six-storey hotel with 126 rooms located in Itasca, Illinois, a suburb of Chicago, and situated around 12 miles from O’Hare International Airport and 27 miles from downtown Chicago, the filing said.
“The hotel, which commenced operations in 1996, is amongst the oldest and smallest assets within
ARA H-Trust’s portfolio,” the REIT said, noting it accounted for 1.1 percent of total portfolio value as of end-December.
“As the hotel is located in a market with declining economic conditions exacerbated by the Covid-19 pandemic, it is anticipated to have a longer road to recovery as compared to the other hotels in the portfolio. Being one of the oldest assets in the portfolio, the property is also envisaged to require sizable capital expenditure outlays relative to its value over the next few years,” ARA US Hospitality Trust said.
The trust said the disposal will free up capital to be redeployed to acquire accretive, higher yielding properties or to pare down existing bank borrowings.