ARA US Hospitality Trust (ARA H-Trust), the hospitality stapled group of ARA Asset Management, has entered into an agreement to acquire three US-based Marriott-branded hotels for $84.5 million, according to a stock exchange filing.
The transaction will be funded primarily through debt and internal cash resources, the trust said. Upon completion, ARA H-Trust’s portfolio will grow to 41 hotels with 5,340 guest rooms across 22 states in the US.
The accretive acquisition at a net property income yield of 8 per cent is expected to increase ARA H-Trust’s pro forma distribution income from its listing date on 9 May 2019 to 30 September 2019 by $1.4 million, the trust said, if the acquisition was assumed to be completed on the listing date.
The three freehold properties are AC Hotel by Marriott Raleigh North Hills, Courtyard San Antonio at The Rim, and Residence Inn San Antonio at The Rim.
“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,” commented Jin Yong Lee, CEO of ARA H-Trust.
Lee expects the new portfolio will contribute robust, stable cashflows to ARA H-Trust’s 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.”
AC by Marriott Raleigh North Hills is a mixed-use development consisting of more than 1 million square feet of office space, with notable tenants such as PwC, KPMG and Bank of America, along with retail, entertainment and residences. Meanwhile, Courtyard San Antonio and Residence Inn San Antonio are located adjacent to each other in a submarket in San Antonio.
ARA H-Trust was listed on the SGX mainboard on May 9 after raising $498 million in an IPO. It is managed by ARA Asset Management, the S$83-billion global integrated real assets fund manager.