Ashford Hospitality Prime, Inc. on Friday announced that the Independent Directors of the Board have decided to explore a full range of strategic alternatives, including a possible sale of the company. The directors have retained Deutsche Bank Securities as their financial advisor to assist in this process.
“We do not believe Ashford Prime’s current share price accurately reflects the company’s intrinsic value,” said Monty Bennett, Ashford Prime’s chairman and CEO. “While we are confident in our strategic plan, we have concluded that we should consider all other opportunities to maximize shareholder value.”
The REIT focused on investing in luxury hotels located in resort and gateway markets does not intend to make any further public comment regarding the review until it has been completed.
David Loeb, analyst at R.W. Baird, wrote a note Friday viewing this announcement positively as Prime trades at a 32% discount to Baird’s $18.05/share NAV, one of the largest discounts on its coverage list. “Prime’s high cost of capital has limited management’s ability to narrow the valuation gap,” Loeb wrote. “While Ashford Prime has cumbersome CMBS debt that would need to be assumed, we expect the platform could attract significant interest from buyers as we estimate the portfolio is currently trading at a 9.5% implied real estate cap rate on 2015E NOI.”