Ashford Hospitality Trust, a Dallas-based real estate investment trust seeking to improve its liquidity and balance sheet after navigating some of the early impacts of the pandemic, has landed a new $37 million loan on an historic hotel in downtown New Orleans.
The new funding for the luxury 226-room Le Pavillon New Orleans at 833 Poydras St. in New Orleans comes ahead of an initial loan maturity date in January. It also helps positions Ashford Hospitality Trust for the future as it seeks to deleverage its balance sheet and pull hotels from its portfolio from cash traps with lenders.
Ashford Hospitality Trust President and CEO Rob Hays said the REIT was pleased to be able to refinance this loan for the same loan amount as the prior loan and extend its maturity date at "an attractive spread in this challenging financing market."
Ashford Hospitality, which as of August had a portfolio of 100 hotels with 22,313 rooms, has sought to free up capital with the sale of non-core assets in its portfolio. The REIT has a total of $3.8 billion in loans with a blended average interest rate of 6.7%, the company said, as of the end of September. About 85% of its hotels are in cash traps with respective lenders, meaning any excess cash from operations will be held by the lender and not available for corporate purposes.
Along with the new, non-recourse loan, the REIT also recently sold the Sheraton Ann Arbor at 3200 Boardwalk St. in Ann Arbor, Michigan, for $34.5 million in cash and a $1.5 million interest-free receivable in September. The cash proceeds were used to pay down debt on the property. The REIT did not initially disclose the name of the buyer.
The hotel was likely one of two hospitality properties mentioned by Hays in an earnings call with investors, who said the deals would close this year. The chief executive made the declaration as he outlined a strategy of trimming non-core hotels from its portfolio as it seeks to deleverage its holdings.
"We have significantly delevered our balance sheet, and we continue to take decisive actions to improve our liquidity, build our cash balance and enhance our operational and financial flexibility," said Hays in a recent statement. "Looking ahead into 2023, we continue to be pleased with how our portfolio is performing and believe we are well-positioned for any economic scenario.”