Acrophyte Hospitality Trust Announces Proposed Sale of Hyatt Place Memphis Primacy Parkway

Key Highlights

• Proposed Sale: Acrophyte Hospitality Trust (ACRO-HT) has entered into a conditional purchase and sale agreement for the divestment of Hyatt Place Memphis Primacy Parkway (HPMPP) for US\$7.75 million.
• Buyer: Shivam Patel.
• Valuation: Independent valuation by HVS Consulting and Valuation values the property at US\$8.5 million as of July 31, 2025, making the sale price an 8.8% discount to valuation.
• Completion Timeline: Expected completion in Q1 2026.
• Net Proceeds: Estimated at US\$7.3 million after divestment fee and transaction costs.

Detailed Analysis of the Divestment

Description of the Asset

Hyatt Place Memphis Primacy Parkway, a 126-room hotel in Memphis, Tennessee, began operations in 1996. Positioned near St. Francis – Memphis and Memphis International Airport, the hotel has faced significant performance and market challenges in recent years.

Performance and Strategic Rationale

• HPMPP is classified as a non-core, underperforming asset within ACRO-HT’s portfolio, contributing only 1.2% to portfolio value and ranking in the bottom quartile for gross operating profit (GOP).
• Operational performance has been weak, with a GOP margin of 17.2% in 2024 compared to the portfolio average of 35.3%. Revenue per available room (RevPAR) Index stood at just 87% in 2024.
• Memphis market dynamics are negative: Corporate demand has declined due to FedEx downsizing, and supply has increased, especially downtown, leading to performance erosion in the outer submarket where HPMPP is located.
• Property value has declined 34.6% over the past 5 years due to weakened market conditions and operational inefficiencies.
• Asset will require significant capital expenditure: Immediate brand-required renovations (~US\$3.7 million) and additional upgrades (~US\$800,000) would total 44% of the asset value, mainly for deferred maintenance rather than profit growth.
• The sale avoids a dilutive capital outlay and allows ACRO-HT to redeploy resources to higher-performing assets.

Financial Impact and Use of Proceeds

• Net divestment proceeds are estimated at US\$7.3 million.
• Proceeds will be used to:
  • Fund ongoing renovations in the existing portfolio
  • Pare down existing bank borrowings, improving leverage and debt headroom
  • Acquire accretive, higher-yield assets
  • Support general working capital needs
• Divestment Fee: Managers entitled to a divestment fee of approximately US\$39,000 (0.5% of sale consideration).
• Transaction costs: Approx. US\$456,000.

Pro Forma Financial Effects

Note for shareholders: The sale is expected to be accretive to distributable income per stapled security (DPS), with a rise from 1.772 US cents to 1.849 US cents. NAV per stapled security remains unchanged at US\$0.73.

Disclosable Transaction Status

• This divestment qualifies as a “Disclosable Transaction” under SGX Listing Manual Rule 1010, with notable relative figures: NAV impact (2.0%), NPI impact (0.3%), and market capitalization impact (5.2%).

Conditions and Timeline

• Completion subject to standard due diligence, termination of management and franchise agreements, clear title, and other customary conditions.
• Due diligence period: 60 days from PSA signing (16 December 2025), followed by completion 30 days post-due diligence.
• Initial deposit: US\$100,000, non-refundable except under PSA terms.

Shareholder and Director Interests

• Certain directors collectively hold 248,000 stapled securities.
• No other material interests from directors or controlling securityholders in the transaction.

About Acrophyte Hospitality Trust and Sponsor

• ACRO-HT portfolio: 32 select-service hotels, 4,188 rooms, across 17 US states.
• Managers are wholly-owned subsidiaries of Acrophyte Asset Management Pte. Ltd., itself a subsidiary of Tang Organization Pte. Ltd.
• Tang Organization is a multinational conglomerate active in real estate, construction, hospitality, and education.

Implications for Shareholders and Price Sensitivity

• Price Sensitive: The sale of HPMPP represents a strategic shift to divest underperforming assets and redeploy capital into higher-yield investments, which could positively impact distributable income and potentially share value.
• Improved portfolio quality and financial flexibility could enhance investor confidence and future growth prospects.
• Risks: Forward-looking statements are subject to market and operational risks. The realized benefits depend on effective capital redeployment and prevailing market conditions.

Disclaimer

The above article is for informational purposes only and does not constitute investment advice. Investors should note that the value of stapled securities and income derived from them may fall as well as rise. Investments in securities are subject to risks, including possible loss of principal. Past performance is not indicative of future results. Predictions, projections, or forecasts are not guarantees of actual future performance. Investors are advised to consult their own financial advisors before making investment decisions.

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