Acrophyte Hospitality Trust Announces US\$10 Million Divestment of Hyatt Place Detroit Livonia

Key Points

• Proposed Sale: Acrophyte Hospitality Trust (ACRO-HT), through its wholly-owned subsidiary, has entered into a conditional purchase and sale agreement to divest Hyatt Place Detroit Livonia (HPDL) for US\$10 million in cash.
• Independent Valuation and Pricing: The property was independently valued at US\$10.3 million as of 31 July 2025, with the sale price representing a 2.9% discount to valuation.
• Financial Effects: The sale is expected to enhance distributable income per stapled security (DPS) and will have a negligible impact on the net asset value (NAV) per stapled security.
• Strategic Rationale: HPDL is a non-core, underperforming asset requiring significant capital expenditure. Proceeds will strengthen the balance sheet, fund ongoing renovations, reduce debt, or enable accretive acquisitions.
• Completion Timeline: The transaction is projected to close in Q1 2026, subject to customary conditions and due diligence.
• Regulatory Disclosure: The sale constitutes a “Disclosable Transaction” under SGX Listing Rules, with relevant comparative figures provided for NAV, NPI, and market capitalization.

Detailed Article

Acrophyte Hospitality Trust (ACRO-HT) has announced a significant portfolio move with the proposed divestment of its Hyatt Place Detroit Livonia (HPDL) property. The stapled group, listed on the Singapore Exchange, revealed that its wholly-owned indirect subsidiary signed a conditional purchase and sale agreement on 8 December 2025 (U.S. time) with NJA Management Group LLC for the sale of HPDL at a cash consideration of US\$10 million.

About the Property

HPDL began operations in 1998 and is a 127-room select-service hotel located in Livonia, a Detroit suburb. The hotel is situated off Highway 275, surrounded by residential buildings, healthcare offices, and industrial parks, making it a strategic yet challenging asset within the ACRO-HT portfolio.

Valuation and Sale Consideration

DBS Trustee Limited, as trustee for ACRO-HT, commissioned an independent valuation from HVS Consulting and Valuation, which valued HPDL at US\$10.3 million as of 31 July 2025. The sale price was negotiated on a willing-buyer, willing-seller basis and reflects a minor discount, which takes into account current market conditions and the asset’s performance.

Financial Impact and Use of Proceeds

• Net Proceeds: After deducting a 0.5% divestment fee (US\$50,000) and estimated transaction costs (US\$495,000), the net proceeds are expected to be approximately US\$9.5 million.
• Deployment of Funds: The Managers intend to use the proceeds to fund renovation needs in the existing portfolio, reduce debt, pursue value-accretive acquisitions, or meet general working capital requirements.

Pro Forma Financial Effects:

• DPS Impact: If the divestment had been completed on 1 January 2024, the pro forma DPS would increase from 1.772 US cents to 1.866 US cents per stapled security.
• NAV Impact: NAV per stapled security would remain at US\$0.73, reflecting the sale’s negligible impact on overall NAV.

Strategic Rationale for the Sale

• Non-Core, Underperforming Asset: HPDL contributes just 1.5% to portfolio value and has a gross operating profit margin of 20.3%, which is significantly below the portfolio average of 35.3%. Its RevPAR index was only 94% in 2024, and its value has dropped by 28.9% since 2019.
• Operational Challenges: The property faces challenging labor market conditions, resulting in staffing issues and inefficiencies.
• Deferred Maintenance: HPDL requires significant capital investment, much of which would go towards deferred maintenance and brand requirements, with limited upside potential.
• Portfolio Optimization: Divesting HPDL allows ACRO-HT to avoid further capital outlay on this asset and redeploy resources to higher-yielding properties or strategic initiatives.

Transaction Terms and Conditions

• An initial deposit of US\$200,000 is payable by the purchaser and will be applied towards the sale consideration upon completion.
• The due diligence period is 45 days from the PSA signing, with completion to occur within 45 days after due diligence expiry.
• The sale is subject to standard conditions precedent, including satisfactory due diligence, representations and warranties, and necessary franchisor consents.
• The PSA includes standard representations, warranties, and indemnities customary to U.S. property transactions.

Regulatory and Shareholder Information

The sale qualifies as a “Disclosable Transaction” under SGX Listing Rule 1010, with the following comparative metrics:

• NAV: 2.4% of ACRO-HT’s portfolio
• Net Property Income (NPI): 0.4% of the portfolio
• Market Capitalization: 6.9% of ACRO-HT’s market cap as of 8 December 2025

There are no proposed changes to the board or management as a result of the transaction. Certain directors hold a collective interest of 248,000 stapled securities, but no other director or controlling shareholder holds any interest in the sale beyond what is disclosed.

Potential Price-Sensitive Factors for Investors

• The divestment removes an underperforming, capital-intensive asset and is expected to boost distributable income per stapled security.
• Proceeds can be used for debt repayment, which may improve ACRO-HT’s leverage ratios and financial flexibility, supporting potential future distributions or acquisitions.
• The transaction is part of a broader portfolio optimization strategy, signaling active asset management and capital recycling to maximize unitholder value.
• Completion risk exists, given conditions precedent, but these are standard for transactions of this nature.

About Acrophyte Hospitality Trust

ACRO-HT, formerly ARA US Hospitality Trust, is a hospitality stapled group listed on SGX, investing in income-producing U.S. hotels. The current portfolio comprises 32 select-service hotels with a total of 4,188 rooms across 17 states. The managers are wholly owned subsidiaries of Acrophyte Asset Management Pte. Ltd., itself a subsidiary of Tang Organization Pte. Ltd.

Disclaimer

This article is for informational purposes only and does not constitute investment advice or a recommendation to buy or sell any security. Investors should note that past performance is not indicative of future results, and investment in stapled securities involves risks, including the possible loss of principal. Potential investors are advised to consult their financial advisors before making any investment decisions. The financial effects and forward-looking statements in this article are based on information available as of the announcement date and may be subject to change.

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