DALLAS—Ashford Hospitality Prime Inc. has entered into a definitive agreement to acquire the 80-room Hotel Yountville in Yountville, CA, for $96.5 million ($1,200,000 per key). The REIT intends to finance the property with approximately $50 million of non-recourse mortgage debt. Post-closing, the property will be managed by Remington Lodging.
The Hotel Yountville was originally built in 1998 and, in 2011, underwent an extensive expansion and renovation that upgraded all guestrooms—including 29 newly built guestrooms—and added a restaurant, spa, meeting and event space, an outdoor pool and lounge patio. Currently, the property has 80 luxury rooms and suites.
The hotel’s indoor amenities include Hopper Creek Kitchen, a restaurant and bar; in-room dining service; complimentary wine tastings; an on-site spa; and 4,392 sq. ft. of indoor and outdoor meeting space. The Hotel Yountville has the following outdoor amenities: a resort-style outdoor heated pool and lounge; landscaping and water features; and the availability of complimentary bicycles for guest use.
“The acquisition of the highly acclaimed Hotel Yountville fits perfectly with Prime’s strategy of owning luxury hotels and resorts,” said Richard J. Stockton, Ashford Prime’s CEO. “This transaction presented a great opportunity for us given the quality of this asset and its unique location in an attractive market in the Napa Valley with high barriers to entry. We expect to achieve improvements in the performance of this hotel given the operating synergies with our nearby Bardessono property that we acquired in 2015.”
The acquisition is expected to close within 60 days subject to customary closing conditions, and subject to the Ashford Prime’s right to extend closing for an additional 60 days subject to certain conditions. Because the acquisition is subject to customary closing conditions, the company can give no assurance that the transaction will be consummated by such date or at all.
The purchase price for the Hotel Yountville represents, as of Dec. 31, 2016, a trailing 12-month capitalization rate of 6.2% on hotel net operating income of $5.9 million and a trailing 12-month 14.6x hotel EBITDA multiple, according to Ashford Prime’s preliminary estimates based on unaudited operating financial data provided by the sellers. On a trailing 12-month basis as of Dec. 31, 2016, the Hotel Yountville achieved RevPAR of $469.12, with 87.8% occupancy and an ADR of $534.30, according to unaudited operating financial data provided by the sellers. A reconciliation of non-GAAP financial measures is included in the financial table below.
Additionally, Ashford Prime has signed a non-binding letter of intent to acquire a luxury resort for approximately $150 million. Because the acquisition is subject to the negotiation and execution of a definitive agreement and customary closing requirements and conditions, including completion of due diligence satisfactory to Ashford Prime, the company can give no assurance that the transaction will be consummated on the terms described or at all.