ARA US Hospitality Trust (ARA H-Trust) : XZL 0% has agreed to divest its hotel, Hyatt Place Oklahoma City Airport, for US$8 million as part of efforts to optimise the trust’s portfolio.

In a bourse filing on Saturday (Jul 1), the stapled group’s managers said that the transaction price represents a 7 per cent discount to the independent valuation of the hotel, which was last valued at US$8.6 million as at Dec 31, 2022.

The purchase amount will be received in cash, and the managers will be entitled to a divestment fee of 0.5 per cent of the sale consideration, or about US$40,000.

The divestment is expected to be completed in the third quarter of 2023, the managers said.

The hotel, which is situated on freehold land and began operating in 1997, accounted for 1.2 per cent of ARA H-Trust’s total portfolio value as at Dec 31, 2022.

The managers noted that the hotel is located in a market with “declining economic conditions exacerbated by the Covid-19 pandemic”.

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As one of the trust’s oldest assets, it may also require “sizable” capital expenditure outlays relative to its value over the next few years, they said.

Furthermore, the move would free up capital to be redeployed to either acquire accretive, higher yield properties or pare down existing bank borrowings to improve the portfolio’s average leverage ratio.

For illustrative purposes, the pro-forma distribution per stapled security of the trust would rise to US$0.03074 from US$0.03054 for FY2022 if the sale had been completed on Jan 1, 2022.

Meanwhile, the trust’s pro-forma net asset value would have fallen to US$458.6 million, from US$459.7 million as at Dec 31, 2022.

In July last year, the trust divested another four Hyatt Place hotels for US$32.5 million, citing their declining historical performance in sub-markets with declining demand.

Units of ARA H-Trust rose 1.5 per cent or US$0.005 to close at US$0.34 last Friday.