Ashford's Dulles sale is a loan release, not a comp

Ashford Hospitality Trust cleared the 150-suite Embassy Suites Dulles Airport at 13341 Woodland Park Road in Herndon, Virginia, out of a 13-hotel loan pool, selling it for roughly $22.3 million in cash, net of selling expenses, according to Connect CRE. About $20.6 million of that went to the lender on the 13-hotel mortgage that included the property—a split that says more about the mortgage than about Dulles lodging demand. The seller completed the trade through its indirect subsidiary, Ashford Dulles LP; HREC Investment Advisors arranged the sale and represented Ashford exclusively.

That leaves roughly $1.7 million before other transaction costs, or about $149,000 a suite across the 150 keys, a per-key figure that prices the lender's release schedule at least as much as it prices the submarket. A debt release wearing a hotel's address.

Mark Morris, who led the marketing with Scott Stephens and Dana Weinberg, said the hotel drew interest from across the country, and that the top bidders were metro DC companies that recognized the hotel's long-term value. A top-bidder slate of local firms on a nationally marketed airport hotel suggests the winning underwrite rested on in-place corporate demand within a short drive of the asset—the corridor's demand roster runs from Amazon Web Services and Lockheed Martin to Airbus Americas, Peraton and Walmart—rather than on a wider bet about Herndon hotel values.

The trade supplies no Dulles cap rate—the bid list is a marketing data point and the buyer's underwriting does not appear in the account—leaving the per-key price as a mark on Ashford's balance sheet first and a read on the submarket second.

This masthead made the adjacent point in September, on Related's $33 million Wynwood sale: when the capital structure sets the terms, the trade prices the loan release, not the submarket. Ashford's version is blunter—a residual under 8 percent of the sale price means the number was settled in a conversation between borrower and lender, with the buyer supplying the cash to close it.

Twelve other hotels were pledged against that same loan, and each sale out of the pool will be struck against a release price before it is struck against a buyer's view of value. Watch the residuals there: if they stay thin, the reference point for Dulles airport hotel paper is the mortgage.