Ashford Hospitality Trust, Inc. announced that it has signed a definitive agreement to acquire two Minneapolis hotels, the 229-room W Minneapolis Hotel—The Foshay, and the 60-room Le Meridien Chambers Minneapolis hotel, for total consideration of $101 million in cash. As part of the transaction, the company will assume approximately $56.0 million of mortgage debt on the W Minneapolis Hotel. The assumed debt matures in May 2023 and carries a fixed rate of 5.46 percent. Post-closing, both properties will continue to be managed by Starwood Hotels.
The purchase price represents a trailing 12-month cap rate of 6.0 percent on net operating income and a trailing 14.4x EBITDA multiple. On a forward 12-month basis, the purchase price represents an estimated cap rate of 7.0 percent on net operating income and an estimated 12.5x EBITDA multiple. On a trailing 12-month basis, the Le Meridien Chambers Minneapolis achieved RevPAR of $171.00, with occupancy of 84.9 percent and Average Daily Rate of $201.45, and the W Minneapolis Hotel achieved RevPAR of $166.84, with occupancy of 82.0 percent and Average Daily Rate of $203.40.
“We are excited about this transaction as it represents a remarkable opportunity to acquire two well-located hotels in the Minneapolis market, which is experiencing strong RevPAR growth,” said Monty J. Bennett, Ashford Trust’s chairman and chief executive officer. “The W Minneapolis is an iconic landmark and both hotels are in excellent physical condition with minimal capex needs. Further, with the expansion of demand drivers, including the highly anticipated addition of the New Minnesota Stadium, which is expected to open in 2016, we believe these hotels are well-positioned to achieve further increases in RevPAR.”
Situated in the heart of downtown Minneapolis, the W Minneapolis Hotel—The Foshay is located near the Minnesota Orchestra Hall, the Target Center, and Target Field. The historic Foshay Tower was the first skyscraper built in the state of Minnesota and was the tallest building in Minneapolis from 1929-1971. In 2008, following a $90 million restoration and reinvestment in the property, the building reopened under the W Hotels brand. Hotel amenities include 6,700 square feet of meeting space, the open aired Foshay Tower Museum and Observation Deck, state-of-the-art FIT Gym, 24-hour WIRED Business Center, and dining including Manny’s Steakhouse.
The Le Meridien Chambers Minneapolis offers 60 guest rooms on five floors of two landmark revival buildings. The hotel is a quick walk from the Orpheum Theater, a mile from the Walker Art Center and 1.3 miles from the Guthrie Theater. Hotel amenities include 3,648 square feet of meeting space, a stylish bar and restaurant, a fitness center, and currently features over 200 pieces of original contemporary art work in the guestrooms and public areas.
