DALLAS—Ashford Hospitality Trust, Inc. has signed a definitive agreement to acquire two Minneapolis hotels: the 229-room W Minneapolis Hotel – The Foshay and the 60-room Le Méridien Chambers Minneapolis hotel, for total consideration of $101 million in cash ($349,000 per key).
As part of the transaction, the company will assume approximately $56 million of mortgage debt on the W Minneapolis Hotel. The assumed debt matures in May 2023 and carries a fixed rate of 5.46%. Post-closing, both properties will continue to be managed by Starwood Hotels.
The purchase price represents a trailing 12-month cap rate of 6% 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% on net operating income and an estimated 12.5x EBITDA multiple. On a trailing 12-month basis, the Le Méridien Chambers Minneapolis achieved RevPAR of $171, with occupancy of 84.9% and ADR of $201.45, and the W Minneapolis Hotel achieved RevPAR of $166.84, with occupancy of 82% and ADR of $203.40.
According to Monty J. Bennett, Ashford Trust’s chairman and CEO, 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,” he stated.
Situated in 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 sq. ft. 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.
An exclusive Minneapolis Art Hotel, the Le Méridien Chambers Minneapolis offers 60 guestrooms on five floors of two landmark revival buildings. The hotel is within walking distance of the Orpheum Theater, a mile from the Walker Art Center and 1.3 miles from the Guthrie Theater. Hotel amenities include 3,648 sq. ft. of meeting space, a bar and restaurant, a fitness center, and currently features more than 200 pieces of original contemporary art work in the guestrooms and public areas.