DALLAS—Ashford Hospitality Prime has entered into a definitive agreement to acquire the leasehold interest in the 62-room Bardessono Hotel and Spa in Yountville, Calif., for a total consideration of $85 million ($1,370,000 per key). Post-closing, the property will be managed by Remington Lodging. The acquisition is expected to close in approximately 30 days, subject to customary closing conditions.
The Bardessono Hotel and Spa is centrally located in the heart of the Napa Valley. It is the only LEED Platinum certified hotel in California and one of only three LEED Platinum certified hotels in the United States. Amenities include a restaurant and bar, an on-site spa, a fitness center, 6,065 square feet of indoor and outdoor meeting space, and a rooftop resort-style pool. The hotel is on a ground lease that expires in 2105.
“The acquisition of the award-winning Bardessono Hotel and Spa fits perfectly with Prime’s strategy of finding quality, high RevPAR assets in gateway and resort markets,” said Monty J. Bennett, Ashford Prime’s chairman and CEO. “This transaction presented a great opportunity for us given the superb quality of this asset, its unique location in an attractive market in the Napa Valley with extremely high barriers to entry, and virtually no short term capex needs as the hotel was recently built in 2009. We look forward to continuing the build out of Prime’s portfolio with high quality hotels in gateway and resort markets.”
The purchase price for the Bardessono Hotel and Spa, after adjusting for the key money, represents a trailing 12-month cap rate of 4.6 percent on net operating income and a trailing 18.4x EBITDA multiple, according to the company’s preliminary estimates based on unaudited financial data provided by the sellers. On a forward 12-month basis, the purchase price, after adjusting for the key money, represents an estimated cap rate of 5.2 percent on net operating income and an estimated EBITDA multiple of 16.5x. On a trailing 12-month basis as of April 30, the Bardessono Hotel and Spa achieved RevPAR of $551.10, with 81.6 percent occupancy and an average daily rate of $675.19, according to unaudited financial data provided by the sellers.
This is the first acquisition by the company to utilize the new key money concept recently announced by Ashford Inc. Ashford Inc. will provide $2 million in key money consideration for the acquisition. “Key money” is a common method used by hotel brands whereby a brand will provide a one-time up-front payment in return for branding the hotel. This arrangement provides additional fee income under the brands’ long-term franchise or management agreement. It is expected that the company will have no obligation to pay back the key money, unless the property is sold within a specified period, in which case the company would pay back a portion of the key money.
