ARA US Hospitality Trust has agreed to sell Hyatt Place Pittsburgh Airport for a consideration of US$7.7 million ($10.3 million). The hotel, which is the smallest within the trust’s portfolio, was valued at the same price as at Aug 31, by an independent appraiser. The consideration will be satisfied in cash.
The managers of the trust, on Nov 27, entered into a conditional purchase and sale agreement with Bacall Companies to sell the property.
Hyatt Place Pittsburgh Airport began operations in 1998 with 127 rooms. It is located on the southern side of the Lincoln Highway off I-376. The hotel is eight miles from Pittsburgh International Airport and 12 miles from downtown Pittsburgh. Within the neighbourhood is a mix of retail, commercial, industrial and hospitality properties. The hotel was last renovated in 2016.
The divestment is believed to bring about a series of benefits such as portfolio optimisation for the trust. The sale will also strengthen its balance sheet.
In accordance to the trust deeds, the managers of the trust are entitled to a divestment fee of around US$38,500, or 0.5% of the sale consideration.
The proceeds of the sale will be used to pare down the trust’s existing bank borrowings.
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On a pro forma basis, if the sale had been completed on Jan 1, 2022, the trust’s distribution per stapled security (DPS) would have fallen to 3.051 US cents from 3.054 US cents as reported. Distributable income would have been down to US$17.49 million, from US$17.51 million.
The trust’s pro forma net asset value (NAV) per stapled security would have remained unchanged at 80 US cents if the sale was made on Dec 31, 2022.
The divestment is expected to be completed in the first quarter of 2024.
As at 11.15am, units in ARA US Hospitality Trust XZL are trading flat at 28.5 US cents.
