ARA US Hospitality Trust divests 4-property hotel portfolio for US$32.5m

The trust cited three key benefits from the portfolio's sale.

ARA US Hospitality Trust will divest a four-property hotel portfolio for US$32.5m, or a 3.2% premium above its market valuation.

The portfolio comprises Hyatt Place Pittsburgh Cranberry in Pennsylvania, Hyatt Place Birmingham Inverness in Alabama, Hyatt Place Cincinnati Northeast and Hyatt Place Cleveland Independence in Ohio.

The trust said it aims to gain net proceeds of S$31.4 m from the property's sale, expected to be completed in the third quarter of 2022.

The net proceeds will be used to reduce ARA-H Trust's existing bank borrowings which, in turn, will improve its aggregate leverage, and/or general working capital requirements.

Apart from reducing bank borrowing, the trust said it will benefit from the sale in three ways: portfolio optimisation and rebalancing, long-term focus on higher yields, and strengthened balance sheet for long-term growth.

The trust will retain 36 hotels in its portfolio after the four assets are sold.

This would lead to an increase in its occupancy (from 57.1% to 58.8%), revenue per available room (from US$64 to US%66), gross profit margin (from 31% to 32%), and valuation growth (from 5.2% to 5.7%).

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