Acrophyte Hospitality Trust (ACRO-HT) is disposing of its property Hyatt Place Memphis Primacy Parkway (HPMPP) for a consideration of US$7.75 mil.
The trust, through its indirect wholly-owned subsidiary, ARA USH Chicago entered into a conditional purchase and sale agreement with Shivam Patel, purchaser.
The managers of Acrophye Hospitality Trust believes that the proposed sale will bring benefits to its security holders.
HPMP is considered a non-core and underperforming asset within ACRO-HT’s portfolio. The hotel ranks in the bottom quartile in terms of its contribution to both valuation and gross operating profit, accounting for only 1.2% of the total portfolio value as at Dec 31, 2024.
The hotel suffers from an imbalance of supply and demand, resulting in marketwide performance erosion, says the trust.
The proposed sale will free up capital which can be redeployed to fund capital expenditure needs in relation to the ongoing renovation requirements of the existing portfolio; pare down existing bank borrowings to improve the portfolio’s average leverage ratio and increase debt headroom; or acquire accretive and higher yield properties; or 4) meet general working capital needs.
The pro forma financial effects of the proposed sale are an increase in DPU to 1.849 US cents after the divestment.
Units in ACRO-HT closed flat at 25 US cents on Dec 17.
