Two Ashford-affiliated real estate investment trusts are parting with U.S. hotels amid what one industry expert says is a smaller buyer pool of investors looking for deals.
Braemar Hotels & Resorts has sold the Park Hyatt Beaver Creek Resort & Spa, a 193-key luxury mountain resort in Colorado, to Sixth Street, in partnership with Riller Capital, in a $176 million deal. The hotel was renovated last year with a full-service spa, food and dining options and about 50,000 square feet of meeting space, all with direct access to Beaver Creek Mountain with proximity to Beaver Creek Village's restaurants, boutiques and the performing arts center.
The deal comes as sister REIT Ashford Hospitality Trust has also been offloading hotels. The trust has agreed to sell six hotels for a total of $154.6 million, or $108,000 per key, including Lakeway Resort & Spa, Sheraton Mission Valley San Diego, Silversmith Hotel Chicago Downtown, Hyatt Regency Long Island, Sheraton Indianapolis City Centre and Hilton Garden Inn Jacksonville JTB/Deerwood Park.
The agreements to sell the hotels come as Ashford Hospitality Trust has extended a loan totaling $723.6 million — or about 65% of the appraised value of 18 hotels — until a final maturity date of July 9, 2026.
The REIT has also recently sold the 150-key Embassy Suites by Hilton Dallas near Galleria Dallas to RGB Hospitality, based in Corpus Christi, Texas. The Dallas hotel was the last of a three-property portfolio to sell to a new owner after Ashford Hospitality Trust's advisory firm broke up the portfolio to better offload the hotels. The two other hotels, Embassy Austin Arboretum and Embassy Houston Galleria, sold in February for a combined $27 million.
"We originally marketed this as a portfolio, but current marketing conditions make portfolios really tough," Hunter Advisors Senior Vice President Kami Burnette told CoStar News, in discussing the hotel portfolio. Burnette, along with Mason McDavid, represented Ashford Hospitality Trust in marketing the properties.
"We ended up breaking it up and marketing them individually once we didn't get the traction up front," he said, adding that the Austin hotel in the portfolio had a value-add component, making it interesting to investors.
The North Dallas hotel, fully renovated in 2024, was attractive to a different kind of buyer, Burnette said. In today's market, he said, there's a smaller pool of investors eyeing hotels.
"Transaction volume as a whole is down this year," Burnette, who sits in Austin, told CoStar News. "The environment is one where you have ownership groups that are still trying to reconcile assets that they purchase that are arguably not worth the same as when they purchased it pre-COVID or even in 2022 and 2023 when the market was a bit frothy."
For hotels with upcoming loan maturities, he said, this could add some pressure to refinance or sell a property. And property improvement plans are just getting more expensive by the day, Burnette added.
Meanwhile, long-term fundamentals are playing a big role in one investor's decision to buy.
Sixth Street Principal Aman Gupta said, in a statement of the firm's acquisition of the Park Hyatt Beaver Creek, purchasing "an iconic mountain resort" was "a rare opportunity to invest in irreplaceable real estate in one of the world's most sought-after alpine destinations."
Braemar said in its recent earnings release that the sales price of the Park Hyatt Beaver Creek Resort & Spa represents a 4.6% capitalization rate on net operating income for the trailing 12 months ending March 31.
Both Braemar and Ashford Hospitality executives have said the REITs are strategically offloading hotels.
In reporting first-quarter earnings ending March 31, Ashford Hospitality declined to host an earnings call. President and CEO Stephen Zsigray said in a statement, "From a capital markets perspective, strategic asset sales remain a core component of our plan to reduce leverage and enhance cash flow through both lower interest expense and reduced capital expenditures."
For the record
CBRE advised Braemar on its deal. Financing was provided to the buyer from Starwood Property Trust. Sixth Street was advised by Latham & Watkins, Brownstein Hyatt Farber Schreck, and Eastdil.
Hunter Advisors' Kami Burnette and Mason McDavid advised Ashford Hospitality Trust in its three-hotel portfolio in Texas.