Ashford CEO Discusses Prime Spin-Off

In June, Ashford Hospitality Trust announced that it would launch a spin-off Real Estate Investment Trust (REIT) called Ashford Hospitality Prime. The spin-off is expected to start trading on the New York Stock Exchange (NYSE) in November and will focus on high RevPAR properties in gateway cities in the U.S. and international markets. We spent some time chatting with Ashford’s CEO Monty Bennett to get more information about the company’s plans for the future.

Lodging: Why is now the right time to launch Prime?

Monty Bennett: This would have been a good idea quite some time ago. It’s just taken us a while to figure out the right way to do it and to have the right properties. The industry is still strong, so we wouldn’t want to do it when the industry is not as strong. We have some high-end properties to initially seed the platform and we have other high-end properties that we can feed in over time from Trust to help it grow. All the moons have aligned.


Lodging: How is Prime being positioned as opposed to Trust?

Bennett: The main differentiator is that Ashford Prime will be buying and owning properties with RevPARs double the national average or higher—about $130 or higher. Trust will continue to buy all types of assets, except those high RevPAR ones. When you start to limit yourself to just those high RevPAR assets, you limit what markets you can be in. That’s great for the dedicated real-estate investors, but Ashford Trust will continue to have a lot more flexibility.

Lodging: Have you seen a rebound in upper upscale properties?

Bennett: These higher-end properties tend to do better as you get further into a recover, and we’ve been in this recovery for a few years and now you’re starting to see these type of assets starting to perform better. We think now is a great time to buy some and load up on a few because there is still opportunity for these high-end assets to outperform.

Lodging: When you say the markets for Prime will be limited, does that mean you will focus just on gateway cities? Is that the strategy going forward?

Bennett: We’ll stay in those gateway cities with Prime. And we will be more open to looking internationally as well. These properties are high RevPAR properties and you’re not going to find that in secondary and tertiary markets.

Lodging: Was there a certain type of investor that you weren’t attracting with Trust that you are hoping to attract with Prime?

Bennett: The dedicated real estate investors have never been much of a big investor into our Trust platform. They like more specificity of property types and they like lower leverage. We like the diversification. Now everybody can be happy because those real estate investors can have this platform that is just higher-end properties and lower leverage, but we, as management, have investments in both Prime and Trust, so we get diversification.