Checkmate, Monty Bennett?

chart01.pngWhile Ashford Prime has been embroiled in a proxy fight with major shareholder and activist, Sessa Capital, this Wednesday morning the company finally received a decent buy proposal from Weisman Group, a California based real estate investor. The company offered $20.25 a share, although the share was trading at $11.32 the day before. This offer comes just before the annual meeting of shareholders scheduled to take place this Friday, June 10. Ashford Prime has stated they plan to study the offer.

The offer is less than what Ashford believed was the fair value of the company. Last August, the company said the NAV was approximately $28, but that was before they sold a Courtyard hotel in Seattle. Currently, they are marketing another hotel in San Francisco. Also, Sessa Capital has tried in court to have the right nominate candidates for their board. If I were Monty Bennett, CEO and Chairman of Ashford Prime, I would certainly sit down at the table with these folks and make a counteroffer.

Additionally, the offer comes at a time when lodging REITs have fallen out of favor. Several stocks have plummeted more than 30% from the previous year. Although several quality lodging REITs have demonstrated great results lately, they have not been able to get closer to their fair value. In fact, investors are afraid that lodging’s cycle peak has passed, but it does look as if there are some investors (like Weisman) willing to cover the gap between NAV and share price.

Ashford Prime saw a quick spike this morning, but trading has been interrupted at just under $15. Weisman already owns 5% of the company. This offer is certainly very timely and provides as honorable exit strategy for clumsy activist Sessa and greedy advisor Monty Bennett. Not only will it allow him to save face with the activists, but shareholders will gain a whopping premium and Weisman will be buying quality assets that are consistently highly rated.

Source: Ashford Hospitality Prime, Inc., (NYSE: AHP)

Disclaimer: This newsletter is not engaged in rendering tax, accounting, or other professional advice through this publication. No statement in this issue is to be construed as a recommendation to buy or sell any security or other investment. Please do your own due diligence before making any investment decision. Some information presented in this publication has been obtained from third-party sources considered to be reliable. Sources are not required to make representations as to the accuracy of the information, however, and consequently the publisher cannot guarantee accuracy.

Disclosure: The author has no positions in any shares mentioned, and no plans to initiate any positions within the next 72 hours.

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