FBR Capital Maintains an 'Outperform' on Ashford Hospitality Trust (AHT); Acquires Majority Stake in $1.3B, 28 Hotel Highland Portfolio
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Price: $1.27 --0%
Rating Summary:
6 Buy, 10 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 11 | New: 7
Rating Summary:
6 Buy, 10 Hold, 3 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 10 | Down: 11 | New: 7
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FBR Capital maintains an 'Outperform' on Ashford Hospitality Trust (NYSE: AHT).
FBR analyst says, "Bottom line: we see this acquisition as a positive for AHT, as the company appears to have executed a highly complex transaction, acquiring a significant number of full-service assets (19 full service hotels) in an off-market deal. The acquisition likely raises AHT’s RevPAR growth and nominal RevPAR profile as the acquired hotels had higher RevPAR growth and nominal RevPAR than AHT’s existing assets in 2010. While in the near term, portfolio margins may likely drop slightly as EBITDA flow through from the acquired assets is lower compared with AHT’s existing portfolio (18% vs. 104% for AHT’s existing portfolio), there appears to be significant potential for margin improvement going forward given that AHT’s affiliate, Remington Hospitality, will manage 17 of the 28 assets. We estimate that following the acquisition, the company will have nearly 80% of the company’s room count focused on the Upper Upscale segment, vs. about 50% previously which in our view warrants a slightly higher valuation multiple given that peers with higher concentration of Upper Upscale assets trade at a one-to-two turn premium over AHT."
For more ratings news on Ashford Hospitality Trust click here and for the rating history of Ashford Hospitality Trust click here.
Shares of Ashford Hospitality Trust closed at $9.96 yesterday.
FBR analyst says, "Bottom line: we see this acquisition as a positive for AHT, as the company appears to have executed a highly complex transaction, acquiring a significant number of full-service assets (19 full service hotels) in an off-market deal. The acquisition likely raises AHT’s RevPAR growth and nominal RevPAR profile as the acquired hotels had higher RevPAR growth and nominal RevPAR than AHT’s existing assets in 2010. While in the near term, portfolio margins may likely drop slightly as EBITDA flow through from the acquired assets is lower compared with AHT’s existing portfolio (18% vs. 104% for AHT’s existing portfolio), there appears to be significant potential for margin improvement going forward given that AHT’s affiliate, Remington Hospitality, will manage 17 of the 28 assets. We estimate that following the acquisition, the company will have nearly 80% of the company’s room count focused on the Upper Upscale segment, vs. about 50% previously which in our view warrants a slightly higher valuation multiple given that peers with higher concentration of Upper Upscale assets trade at a one-to-two turn premium over AHT."
For more ratings news on Ashford Hospitality Trust click here and for the rating history of Ashford Hospitality Trust click here.
Shares of Ashford Hospitality Trust closed at $9.96 yesterday.
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