Luxury Sarasota Resort Commands $171M
Ashford Hospitality Prime has agreed to purchase the 266-key Ritz-Carlton hotel, reflecting the REIT’s strategy of acquiring institutional-quality assets in high-growth markets across the U.S.
By Keith Loria, Contributing Editor
Ashford Hospitality Prime Inc. is in agreement to acquire the Ritz-Carlton Sarasota, a 266-key hotel in Sarasota, Fla., for $171 million.
Last year, the revenue per available room (RevPAR) registered $284.38. As part of the deal, the unnamed seller will provide a $5.5 million income guaranty to cover any decrease from 2017 hotel gross operating profit for up to three years.
Additionally, Ashford Hospitality Prime is acquiring a 22-acre plot of vacant land adjacent to the golf course for $9.7 million, that is being entitled for residential development.
“The Ritz Carlton Sarasota is an institutional quality asset in a high growth market that we were able to secure at an attractive price,” Richard Stockton, Ashford Prime’s CEO, told Commercial Property Executive. “The market to acquire luxury hotel assets of this caliber is fairly thin, and in many cases the target pricing would not meet our financial return objectives. In this case, we were able to acquire the asset at an attractive basis based on historical operating performance, but can also look forward to future growth.”
High-caliber asset
The Ritz-Carlton Sarasota was originally built in 2001 and offers 31 suites among its guestrooms. The hotel features eight food and beverage outlets, including the acclaimed Jack Dusty waterfront restaurant, 29,000 square feet of flexible indoor meeting space, two outdoor pools, a 24-hour state-of-the-art fitness club, lighted tennis courts and the Ritz Kids Club. The property also boasts a waterfront location on Sarasota Bay and includes amenities such as a beach club with 410 feet of beachfront, as well as a golf course designed by Tom Fazio.
“The city of Sarasota was recently ranked by Forbes as the sixth-fastest growing city in the U.S.,” Stockton said. “And while we are not the only hoteliers to notice this, and there is some near-term supply on the horizon, our returns are bolstered through a gross operating profit holdback guarantee provided by the sellers. So, we feel comfortable that this investment will generate attractive returns for our shareholders.”
The Ritz Carlton Sarasota is a very interesting downtown resort in that the hotel’s guestrooms are centrally located within the vibrant Sarasota downtown area, close to the marina. However, its resort amenities, namely its Beach Club on the world class Lido Key and its Tom Fazio Golf Course are located offsite from the main hotel building. That way, the hotel can appeal to groups, as well as both corporate and leisure transient travelers.
According to Stockton, the hotel fits perfectly into the company’s strategy of acquiring luxury hotel assets in the U.S.
“We are redeploying proceeds from the sale of two of our non-core assets, one of which is already closed and another currently listed for sale,” he said. “So, we do not need to issue equity to fund this transaction, while we are enhancing the quality of the portfolio. We already have the highest-quality portfolio among Lodging REITs, as measured by RevPAR, and this transaction moves us even further ahead of the pack in that regard.”
The hotel and associated amenities are in first-class condition due to a rigorous program of ongoing maintenance, notwithstanding the fact that the hotel completed a major renovation in 2015.
“Furthermore, we believe it has all of the amenities necessary to deliver a fantastic guest experience to a wide variety of guests,” Stockton said. “As a result, we do not anticipate investing beyond the normal maintenance program at this time.”
Expected to close in early April, the acquisition is subject to customary closing conditions.
An active company
It was 15 months ago that Ashford Hospitality Prime appointed Stockton as its new CEO and over that time, he’s led the company on a number of substantial transactions.
In November, Ashford Hospitality Prime sold the Marriott Plano Legacy Town Center, a 404-key hotel in Plano, Texas, for $104 million. Last summer, Ashford Hospitality Prime extended the ground lease at the Hilton La Jolla Torrey Pines, a 394-key hotel in San Diego, by 24 years with a new expiration date in 2067.
Images courtesy of Ashford Hospitality Prime Inc.
