The Texan hotel REIT Ashford Prime won’t bow down. This Monday, Monty Bennett, CEO, and chairperson of Ashford Prime, wrote a letter to The Weisman Group rejecting an offer of $20.25 a share. The letter went on to say that the price offered was way below the company’s value. In 2015, Ashford Prime estimated the company value at $27.60 per share.
Bennett, who is also the chairperson and in charge of the firm’s external advisory, has also said that the assigned a value of $70 million to end the agreement between advisory and Ashford was notably below the contractual value. Ashford Prime has already pointed out that the company’s contractual value could be in the range of hundreds of millions of dollars. Activist Sessa Capital, in a row with Ashford has indicated that this amount was equivalent to a considerable portion of the REIT’s market cap, which was unusual.
Since the stock market has never swayed up to the offer price of $ 20.25, this decision wasn’t surprising. As a matter of fact, the share bid only went up from $ 11 to approximately $15. It was a sign that some investors were cynical the sales would ever come true. Following the news, the shares dropped by 6% and stabilized slightly up $13.
The REIT was right to mention in the letter that they have a high quality group of hotels. One of the main reasons they were spun off of Ashford Trust was to own high RevPAR properties. These properties are competitive and well rated among other hotels.
The bottom line
Today, doubts abound about Ashford Prime’s stock performance. The Weisman Group has two options. One is to walk away, or two is to accept the net asset value and pay up. For that reason, the stocks have now been placed as speculative.
Source: Ashford Hospitality Prime, Inc. (NYSE:AHP), Ashford Inc. (AMEX:AINC)
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