Ashford Hospitality Trust has entered binding agreements to divest Le Pavillon hotel in New Orleans, and two Embassy Suites by Hilton hotels in Houston and Austin, US.
The combined gross proceeds from these transactions are estimated at approximately $69.5m.
The company estimates indicate this will lead to an annual cash flow improvement exceeding $2m and anticipated savings of $14.5m in future capital expenditures, based on prevailing mortgage interest rates.
The agreement for the 226-room Le Pavillon sets the transaction value at $42.5m, translating to approximately $188,000 per room.
Closing of the sale is currently scheduled for next month, subject to customary conditions.
The transaction represents a 2.6% capitalisation rate calculated on net operating income (NOI) or a multiple of 27.2 times hotel earnings before interest, taxes, depreciation, and amortisation (EBITDA) for the 12 months completed on 30 September 2025.
Ashford has stated that there can be no guarantee of completion on these terms.
For the Embassy Suites by Hilton Austin Arboretum and Embassy Suites by Hilton Houston Near the Galleria, totalling 300 rooms, the sale price is agreed at $27m. This equates to $90,000 per room.
Completion of this sale is expected in January 2026, also subject to standard closing conditions.
Adjusting for anticipated capital expenditure of $14.5m, the combined sale reflects a 2.2% capitalisation rate on NOI or a multiple of 29.9 times hotel EBITDA for the 12 months ending on 30 September 2025.
Without factoring in the expected capital spend, the combined sale price reflects a capitalisation rate of 3.3% or a multiple of 19.5 times hotel EBITDA for the same period.
Ashford Hospitality Trust president and chief executive officer Stephen Zsigray said: “Strategic asset sales will continue to play an important part in our plan to deleverage Ashford Trust while also improving cash flow and liquidity. We believe that the attractive cap rates achieved on these divestitures reflect the value within our portfolio.
“The majority of proceeds will be deployed immediately to retire mortgage debt, improving cash flow after debt service while eliminating sizeable future capital expenditure obligations. This disciplined approach will better position the Company for sustained value creation.”
Ashford operates as a real estate investment trust focused on investments mainly in full-service upper upscale hotels.
Ashford Hospitality Trust in August completed sales of the Residence Inn Evansville East in Indiana for $6m and the Hilton Houston NASA Clear Lake in Texas for $27m.
