Taking a bottom-up approach to rebalancing its portfolio, Singapore-based real estate investment trust ARA US Hospitality has contracted to sell four of its lowest-performing hotel properties.
The REIT said it entered into a conditional purchase and sale agreement with Three Wall Capital on a portfolio of four Hyatt Place hotels totaling 507 rooms for $32.5 million, or about $64,103 per room.
New York-based Three Wall specializes in hotel investments and has acquired 17 hotels during the coronavirus pandemic, paying $311 million, according to CoStar data.
The portfolio under contract comprises Hyatt Place Pittsburgh Cranberry in Pennsylvania, Hyatt Place Birmingham Inverness in Alabama, and Hyatt Place Cincinnati Northeast and Hyatt Place Cleveland Independence in Ohio.
ARA last valued the properties at the end of 2021 at $31.5 million. The agreed-to sale price represents a 3.2% premium above year-end valuation, ARA reported. The properties accounted for approximately 4.4% of ARA's total portfolio value.
ARA said the proposed sale will help to optimize its portfolio by owning hotels with good cash flow-generating capability in markets with strong underlying long-term market fundamentals. The REIT intends to use proceeds from the sale to reduce bank borrowings and/or redeploy capital to acquire new properties.
Completion of the sale is expected to take place in the third quarter.
The sale would leave ARA with 37 select-service hotels.