Ashford Agrees to Sell Houston Property to Deleverage Portfolio

Ashford Hospitality Trust, Inc. AHT has taken another step in its strategic plan to deleverage and optimize its portfolio. The Dallas, TX-based REIT announced a definitive agreement to sell the 242-room Hilton Houston NASA Clear Lake in Houston, TX, for $27 million. The transaction, subject to closing conditions, is expected to be completed in June 2025.

The sale represents an attractive exit for Ashford, yielding a capitalization rate of 3.2% on net operating income (NOI) or 23.6X Hotel EBITDA after adjustments for anticipated capital expenditures for the 12 months ended April 30, 2025. Excluding capital expenditure adjustments, the sale price represents a 5% cap rate on NOI or 15.2X Hotel EBITDA for the 12 months ended April 30, 2025.

This sale will deleverage its Morgan Stanley 17 Pool loan and also result in significant capital expenditure savings going forward.

AHT: In a Nutshell

As Ashford moves closer to addressing its strategic financing challenges and realizes gains from its repositioning efforts, it demonstrates a clear focus on creating value for shareholders.

The company’s assets in the market are well-positioned to capitalize on favorable market conditions while achieving its financial and operational objectives. AHT is expected to grow in the near term as it continues to execute its GRO AHT initiative to drive outsized EBITDA growth and improve shareholder value.

However, the softening of hotel industry fundamentals amid macroeconomic uncertainty and an elevated interest rate environment pose concerns for Ashford.

Over the past three months, shares of this Zacks Rank #3 (Hold) company have declined 21.8%, wider than the industry’s fall of 5.4%.

Stocks to Consider

Some better-ranked stocks from the REIT sector are VICI Properties VICI and W.P. Carey WPC, each carrying a Zacks Rank #2 (Buy) at present. You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

The Zacks Consensus Estimate for VICI Properties’ 2025 FFO per share has been raised marginally over the past month to $2.34.

The Zacks Consensus Estimate for W.P. Carey’s current-year FFO per share has moved northward by 1% in the past month to $4.88.

Note: Anything related to earnings presented in this write-up represents FFO, a widely used metric to gauge the performance of REITs.

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This article originally published on Zacks Investment Research (zacks.com).

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