Main Photo: The Hilton La Jolla Torrey Pines – aerial view from golf course
Date: June 2019
Name: Ashford will add hotel property management to its growing list of hotel-related businesses, which already includes hotel asset management, Premier Project Management, J&S Audio Visual, OpenKey, Pure Wellness, RED Hospitality & Leisure, and Lismore Capital.
No. of Keys: 17,400
Seller: Remington Holdings LP, which is an independent hotel management company with over 40 years of experience in the hospitality business, owned by Monty J. Bennett and Archie Bennett, Jr., the Company’s Chairman and Chief Executive Officer and his father, respectively.
Buyer: Ashford Inc. today announced that it has signed a definitive agreement to acquire the Hotel Management business of privately-held Remington Holdings, LP. The transaction, which is expected to close sometime in the fourth quarter of 2019, is subject to approval by the Company’s stockholders, the receipt of an acceptable Private Letter Ruling (“PLR”) from the Internal Revenue Service, and customary closing conditions.
“The proposed acquisition of Remington’s high-margin Hotel Management business will immediately add scale, diversification and an enhanced competitive position for Ashford in the hospitality industry, while also expanding the breadth of services we offer to our advised REITs,” commented Monty J. Bennett, Ashford’s Chairman and Chief Executive Officer. “With deep industry experience and mutual exclusivity agreements in place with our advised REITs, we believe the acquisition of Remington’s Hotel Management business represents a compelling opportunity for Ashford to further diversify its earnings stream and, moving forward, the potential to expand business to other third-party clients.”
Remington’s Hotel Management business currently provides hotel management services for both Ashford Hospitality Trust, Inc. and Braemar Hotels & Resorts, Inc.
Remington’s portfolio consists of almost 90 hotels with over 17,400 rooms of full-service and select-service properties representing over a dozen brands across 28 states as well as the District of Columbia.
In 2018, Remington Hotel Management had Adjusted EBITDA of approximately $23.4 million. At this time, Remington’s Hotel Management business has very little third-party business outside of the Company’s advised REITs, which will be an area the Company will focus on growing going forward.
Under the terms of the agreement, Ashford will acquire Remington’s Hotel Management business for a purchase price of $275 million, payable by the issuance of $275 million of a new Series D Convertible Preferred Stock. Based on 2018 financial results, the acquisition multiple equates to 11.8x Adjusted EBITDA, which compares to an average of 16.5x for recent comparable transactions.
After the completion of this transaction, Ashford will add hotel property management to its growing list of hotel-related businesses, which already includes hotel asset management, Premier Project Management, J&S Audio Visual, OpenKey, Pure Wellness, RED Hospitality & Leisure, and Lismore Capital.
Now, when its advised REIT platforms acquire hotels, Ashford will have the exclusive right to provide all of these services to those hotels. These services include hotel asset management, hotel property management, project management, design, architecture, procurement, purchasing, construction management, audio/visual services, debt placement, real estate brokerage, mobile roomkey services, hypoallergenic hotel rooms, and watersports activities and travel and transportation services.
Ashford’s special committee was advised by Janney Montgomery Scott LLC as financial advisor, Norton Rose Fulbright US LLP acted as the special committee’s legal advisor for corporate matters, and Locke Lord LLP acted as the Company’s legal advisor for tax matters. Robert W. Baird & Co., Inc. acted as Remington’s financial advisor, and Baker Botts L.L.P. acted as Archie and Monty Bennett’s and Remington’s legal advisor.
Price per Key: US$15,805
THPT Comment: Ashford certainly like the lateral development plan!
First Seen: Hotel News Resource
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