DALLAS—Ashford Hospitality Prime, Inc. has acquired, or has signed definitive agreements to acquire, three properties for a total of $204.3 million. It is set to purchase the leasehold interest in both the 62-room Bardessono Hotel and Spa in Yountville, CA, for a total consideration of $85 million ($1,370,000 per key), and the 237-room W Atlanta Downtown hotel for total consideration of $56.8 million ($239,000 per key). The company has also acquired the 26-room Le Pavillon Hotel for total consideration of $62.5 million in cash ($277,000 per key).
Post-closing, Remington Lodging will manage both the Bardessono Hotel and Spa and Le Pavillon Hotel, while Starwood Hotels will maintain management of the W Atlanta Downtown.
The Bardessono Hotel and Spa was built in 2009, has 62 rooms and suites and is the only LEED Platinum certified hotel in California and one of only three LEED Platinum certified hotels in the U.S. Hotel amenities include guestrooms and suites with private patios/balconies; Lucy restaurant and bar; an on-site spa and fitness center; 6,065 sq. ft. of indoor and outdoor meeting space; a rooftop resort-style; a vegetable garden; and the availability of carbon fiber bicycles and Lexus Hybrid vehicles for guest use. The hotel is on a ground lease that expires in 2105.
“The acquisition of the Bardessono Hotel and Spa fits perfectly with Prime’s strategy of finding quality, high RevPAR assets in gateway and resort markets,” said Monty J. Bennett, Ashford Prime’s chairman and CEO. “This transaction presented a great opportunity for us given the superb quality of this asset, its unique location in an attractive market in the Napa Valley with extremely high barriers to entry, and virtually no short-term CapEx needs as the hotel was recently built in 2009. We look forward to continuing the build out of Prime’s portfolio with high quality hotels in gateway and resort markets.”
The W Atlanta Downtown, which opened in 2009, is part of the Allen Plaza Complex, a $2-billion mixed-use development that includes luxury condominiums as well as Ernst & Young’s headquarters. It has 237 guestrooms including 20 suites. Hotel amenities include more than 9,000 sq. ft. of meeting space; a partially covered outdoor infinity pool and pool bar that offer views of the city; the 3,300-sq.-ft. Bliss Spa; a state-of-the-art FIT Fitness Center; and the BLT Steak restaurant.
“We are very excited about the acquisition of the W Atlanta Downtown as the hotel’s central location in this thriving market offered us an extremely attractive opportunity, and we see substantial upside potential for this property. The W Atlanta Downtown is ideally located to draw corporate demand from the many Fortune 500 companies that call the Atlanta metropolitan area home,” said Bennett. “This acquisition is consistent with our strategy of identifying well-located assets in attractive markets, and we will continue exploring similar transactions to drive the exceptional shareholder returns for which our team is known.”
Located in the heart of downtown New Orleans, the Le Pavillon Hotel sits adjacent to the French Quarter, only five blocks from the music clubs of Bourbon St. and restaurants and antique shops of Royal St. The hotel is a five minute walk from the city’s major sporting venues, the Mercedes Benz Superdome and Smoothie King Arena, as well as only eight blocks from Morial Convention Center. Built in 1907, the property is a member of Historic Hotels of America, Leading Hotels of the World and has been the recipient of AAA’s four-diamond award since 1996. The property has 226 guestrooms and offers amenities such as the Crystal Room Restaurant; the Gallery Lounge; a business center; valet parking; and a rooftop terrace, pool and fitness facility.
“We are excited to announce this acquisition as the first Ashford Trust deal to utilize the new key money concept that we recently announced. We believe this key money concept is a win-win for both the REIT shareholders and the shareholders of Ashford Inc. Additionally, this is a key competitive advantage for Ashford Trust,” said Bennett. “The Le Pavillon hotel has an excellent location in downtown New Orleans and, with its proximity to the major demand generators in the market, is well-positioned to continue to capitalize on the strength of the New Orleans market. With Remington as the property manager, we see substantial upside to the operating performance of this property.”
Key money is a common method used by hotel brands whereby a brand will provide a one-time upfront payment in return for branding the hotel. This arrangement provides additional fee income under the brands’ long-term franchise or management agreement. It is expected that the company will have no obligation to pay back the key money, unless the property is sold within a specified period, in which case it would pay back a portion of the key money.