Ashford Hospitality Trust has returned the ownership of five prominent hotels across the United States to a lending institution. This strategic move is part of a broader plan announced earlier in the year, aiming to stabilize the company's financial position in the wake of pandemic-induced economic challenges.
This action reduces the Dallas-headquartered real estate investment trust's (REIT) portfolio to 95 properties across the U.S., with plans to transfer 14 additional hotels to a consortium representing three financial institutions. The relinquishment of these 19 properties was deemed financially prudent by the REIT. The properties no longer under Ashford's management include the Embassy Suites in both Flagstaff, Arizona and Walnut Creek, California; Marriott hotels in Bridgewater, New Jersey and Durham, North Carolina; and the W Atlanta Downtown in Atlanta, Georgia.
The REIT's leadership has confirmed the successful transition of the five properties to the mortgage lender and is in ongoing discussions regarding a similar transfer of hotels associated with two other loan groups. This process is anticipated to be finalized before early 2024.
Morgan Stanley Bank, Barclays Bank, and Bank of America initially financed $293.8 million for the 14 hotels under discussion. Wilmington Trust NA, representing Trimont Real Estate Advisors, is overseeing the loans and has sought legal action to appoint a receiver to maintain the hotels' value during the impending foreclosure process, as per court records.
Despite these legal proceedings, the REIT assures that there is no litigation with the banks involved. The court documents allege that Ashford violated their loan agreements by failing to meet their debt obligations. The trust representing the lenders argues that the 14 hotels require substantial financial investment to remain operational, a need Ashford seems unable to meet. The trust aims to appoint a receiver to protect the hotels' value and secure the lenders' rights under the loans.
The foreclosure process is expected to span several months. Ashford Hospitality Trust, which primarily invests in high-end, full-service hotels, is also considering the sale of around 10 other properties. This potential sale is aimed at settling the remaining debt of over $180 million owed to Oaktree Capital Management, due in January 2026.+
Source: REIT Notes, CoStar