Ashford Hospitality refinances to extend loan maturities and sells note to improve liquidity
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Ashford Hospitality refinances to extend loan maturities and sells note to improve liquidity
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Category: Worldwide - Industry economy -
Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2009-11-20
Ashford Hospitality Trust, Inc. (NYSE: AHT) today announced the refinancing of its remaining 2010 debt maturity and significant progress on the Company’s 2011 maturities through transactions with Prudential Mortgage Capital Company and Wheelock Street Capital. The $145.0 million non-recourse financing includes an A-Note from Prudential and a B-Note from Wheelock Street with a combined interest rate of 12.26% and a term of six years.
The loans are secured by the Embassy Suites Crystal City, Embassy Suites Orlando Airport, Embassy Suites Santa Clara, Embassy Suites Portland and the Hilton Costa Mesa. The proceeds pay off a $75.0 million loan maturing in 2010 and a $65.2 million loan maturing in 2011 that are secured by the five properties, and provide $4.0 million for capital improvements to be drawn over a 24-month period. The Hilton Auburn Hills and the Hilton Rye Town, which were included in the maturing loans, are now unencumbered. Hodges Ward Elliott represented the Company in the transaction.
During 2009, the Company has completed $265.3 million of loan financings and/or extensions. The combined net proceeds from the year to date financings exceeded the existing loan balances and closing costs. Ashford’s blended weighted average interest rate following the refinancing is 3.62%, assuming the offset to interest expense from the benefit of the interest rate swap. In terms of non-extendable loans coming due, the Company has no further 2009 maturities (except for the previously announced Hyatt Regency Dearborn loan maturity acceleration via foreclosure proceeding), no remaining 2010 maturities, and $229.0 million in 2011. The Company’s unrestricted cash balance as of the end of the third quarter was $197.9 million.
The Company also completed the sale of the Westin Westminster mezzanine loan that was defeased by the original borrower in 2007 as part of a refinancing. The total gross proceeds received by the Company amounted to $13.6 million before transaction costs. The loan had an outstanding balance of $11.0 million with a September 1, 2011 maturity. The Company negotiated for the release of the portfolio of government agency securities serving as the defeased loan collateral, and sold the actual securities via an auction. The Company obtained pricing in excess of the par amount due to the high pay coupon compared to current market rates.
END-Commenting on the announcements, Monty Bennett, Chief Executive Officer, said, "We are pleased to be able to close this financing during this challenging period in the credit markets. Prudential and Wheelock Street demonstrated professionalism throughout this process. Our proactive capital allocation strategy continues to enhance our balance sheet and liquidity, thereby allowing us to focus on transactions that have the greatest value impact for our shareholders.”
Merrick Kleeman, a Managing Partner of Wheelock Street Capital, added, “Outstanding work by talented professionals at Ashford, Prudential and Wheelock made this transaction possible. This portfolio is geographically diversified and well-maintained, and has performed extraordinarily well during the recent downturn. The Ashford refinancing is an excellent first investment opportunity for our firm and we look forward to working constructively with many other owners to provide capital solutions as they refinance or recapitalize assets.”
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