ARA US Hospitality Trust is announcing the sale of Hyatt Place at Pittsburgh's Airport for US$7.7 million:
The Hotel is the smallest within our portfolio, accounting for 1.0% of total valuation as at 31 December 2022. In addition, with the impact of new supply growth, the market has been very slow to recover. In fact, market room demand was negative at a compounded annual growth rate of -7.3% from 2019 to 2022. The Hotel’s RevPAR Index (“RPI”) (competitive index) continues to struggle at 80% in 2023. As a result of the market conditions and continuing underperformance, the property value has declined 9.0% since 2019. Coupled with revenue underperformance, the Hotel is one of the bottom three performers, with a Gross Operating Profit margin of 21.6% in September 2023 trailing twelve months vs the Hyatt Portfolio average of 33.0%.
Furthermore, the Hotel is one of the older assets in our portfolio and will require sizable capital expenditure outlay relative to its value. Capital investment in this Hotel is considered dilutive to distributable income. By selling this asset, the Trust saves capital expenditure dollars that are better redeployed to higher performing assets in the portfolio