Ashford Hospitality Trust, a real estate investment trust that has struggled financially since the onset of the pandemic, has lined up buyers for nearly a dozen hotels in hopes of bringing in about $625 million to shore up finances and pay back millions of dollars in debt.
Ashford borrowed $200 million from Oaktree Capital Management in January 2021 to fund its financially troubled operations, and the loan matures in January 2026. President and CEO Rob Hays told investors during an earnings call Wednesday that about $107 million remains to be paid, and the REIT has been raising funds, selling off properties and refinancing several U.S. hotels, including the Renaissance Nashville in Nashville, Tennessee; the Marriott Gateway in Arlington, Virginia; and the Indigo Atlanta in Atlanta, Georgia.
"I'm very pleased with the progress we have made in paying off our strategic financing," Hays told investors. "The outstanding loan balance is down almost 50% from its original balance. Between the excess proceeds from additional planned asset sales, excess proceeds from planning property refinancings, and proceeds from our nontraded preferred capital raise, we believe we have a viable path to pay off our strategic financing this year."
In tallying the deals, Hays said the REIT has sold off three hotels year-to-date: the 144-room Residence Inn in Salt Lake City, Utah, for $19.2 million; the 390-room Hilton Boston Back Bay hotel in Boston for $171 million; and an 85-room Hampton Inn in Lawrenceville, Georgia, before the close of the first quarter.
Hays also said there are three additional hotels under a sale agreement and another five hotels under letters of intent with would-be buyers. He declined to share with CoStar News additional details on which hotels could be sold, but, in answering questions from an analyst, Hays said capital improvement needs, management agreements and the REIT's shift from limited-service hotels could play a role in those decisions.
Besides seeking sales, Ashford Hospitality has transferred the remainder of the hotels after it announced in July it would hand back the keys to lenders. The REIT has no interest in those hotels' ongoing operations after they were transferred to lenders in deed-in-lieu of foreclosure, Hays said.
At the quarter ending March 31, Ashford Hospitality had 75 hotels in its portfolio with 18,021 rooms. At the beginning of the year, the REIT owned 90 hotels.
The choppy capital markets have been blamed by Hays in the past for potential deals falling apart before closing. This was Hays' last earnings call as president and CEO of the trust after he announced last month he would step down by the end of June.