Ashford Hospitality Trust announced that it has successfully refinanced three mortgage loans with existing balances of approximately $268 million. The previous mortgage loans that were refinanced are:
- $91 million UBS 2 loan with a final maturity date in December 2015
- $103 million Merrill 2 loan with a final maturity date in February 2016
- $74 million Merrill 7 loan with a final maturity date in February 2016
The new loan totals $375 million and resulted in excess proceeds of approximately $81 million after closing costs and reserves. The next hard debt maturity for the company is in April 2017.
The company also announced that it is no longer marketing the 24-hotel select-service hotel portfolio as a single portfolio, but will instead pursue the sale of these assets in smaller groups and individually. Further, the company will pursue the opportunistic sales of its other 38 select-service hotels over time. This past quarter, over a very short period of time, the market for large portfolios of select-service assets changed dramatically, resulting in reduced bids that the company’s management and board of directors believe does not capture the full portfolio value for shareholders. The refined sales process in the form of smaller portfolios and/or individual assets is expected to garner higher values in the current market environment.
“We are pleased to close this refinancing which addressed our remaining 2015 debt maturity as well as all of our 2016 debt maturities,” said Monty J. Bennett, Ashford Trust’s chairman and chief executive officer. “This increased financial flexibility, coupled with the significant excess proceeds, meaningfully improves our liquidity position.”
Bennett continued, “Consistent with our commitment to maximize value for our shareholders, we believe the best course of action is to exercise patience and pursue an opportunistic sales approach in an effort to capture full value for our attractive portfolio of select-service hotels. We are fully committed to our refined investment strategy of focusing on upper-upscale, full-service hotels and given the industry-leading insider ownership at Ashford Trust, this management team is highly aligned with investors to maximize shareholder value.”
Regarding the refinancing, the previous mortgage loans were refinanced through one new mortgage loan pool with a two-year initial term and four one-year extension options, subject to the satisfaction of certain conditions. The loan is interest only and provides for a floating interest rate of LIBOR + 4.87 percent. The loan is secured by seventeen hotels: Sheraton City Center Indianapolis, Hilton Houston Nassau Bay, Hilton St. Petersburg Waterfront, Embassy Suites Palm Beach, Embassy Suites Houston Galleria, Courtyard Crystal City Arlington, Courtyard Alpharetta, Courtyard Foothill Ranch, Residence Inn Falls Church, Residence Inn San Diego Sorrento Mesa, Embassy Suites Austin Arboretum, Embassy Suites Dallas Galleria, Embassy Suites Las Vegas Airport, Courtyard Bloomington, Hampton Inn Evansville, Residence Inn Evansville, and Hilton Garden Inn Jacksonville. The company was also able to structure attractive release provisions in the event the company wishes to sell any of the hotels encumbered by the financing. Through this refinancing, the SpringHill Suites Jacksonville is now unencumbered by debt.