DALLAS—Ashford Hospitality Prime, Inc. has entered into a definitive agreement to acquire the 180-room Ritz-Carlton St. Thomas for $64 million ($355,000 per key) from Marriott International, Inc. The acquisition is expected to close in approximately 30 days, subject to customary closing conditions. The company intends to finance the property with approximately $40 million of non-recourse mortgage debt. The property will continue to be operated as a Ritz-Carlton property under a long-term management agreement with Ritz-Carlton.
The purchase price represents a trailing 12-month cap rate of 10% on net operating income and a trailing 7.2x EBITDA multiple, according to the company's preliminary estimates. On a trailing 12-month basis as of October, Ashford estimates The Ritz-Carlton St. Thomas achieved RevPAR of $433, with an ADR of $555 and 78% occupancy.
Located on 30 oceanfront acres along Great Bay, the hotel, which opened as The Ritz-Carlton St. Thomas in 1996, recently completed a comprehensive $22-million renovation of guestrooms and public space. These include upgraded and additional food & beverage offerings, expanded wedding venue capacity, as well as the construction of a desalination plant and new electricity generators.
All of the property’s 180 guestrooms include a private balcony or terrace with ocean or garden views. Newly remodeled bathrooms feature large double vanities, soaking tubs and separate glass showers. The resort offers unparalleled amenities including a beachfront infinity-edge pool and access to a traditional pool.
The property features the signature Bleuwater Restaurant and three other distinctive oceanfront dining options, as well as more than 10,000 sq. ft. of indoor and outdoor meeting and function space offering views of Great Bay and neighboring St. John; a 7,500-sq.-ft. spa; and a 2,000-sq.-ft. fitness center. The resort also offers Jean-Michel Cousteau's Ambassadors of the Environment eco adventures for children and adults, a comprehensive aquatic center and day sails, sunset cruises and private charters aboard Lady Lynsey, the hotel's 53-foot luxury catamaran.
"The Ritz-Carlton St. Thomas is an iconic U.S. Virgin Islands hotel, underscoring our strategy of investing in high quality, luxury assets in gateway and resort markets,” said Monty J. Bennett, Ashford Prime's chairman and CEO. “Located in a stable market with high barriers to entry, where tourism trends remain positive, this property will be a fantastic addition to our portfolio at what we believe is a great value. Having recently undergone a comprehensive renovation, the resort's RevPAR of more than $430 is already ramping strongly, outperforming its competitive set.
We have the ability to expand the resort further through additional keys and villas. Group revenue booking pace for 2016 is up 8.6% over 2015. With the extremely high quality of this resort, strong cash flow and meaningful growth opportunities, we believe this is a very attractive acquisition for our shareholders."
