Ashford Hospitality Completes 22-Hotel Portfolio Refi

The Dallas-based hotel REIT is continuing its strategy of taking advantage of an attractive lending market, closing its second refinancing this year on the heels of several late 2017 transactions.
Ritz-Carlton Atlanta
Ritz-Carlton Atlanta

Ashford Hospitality Trust has refinanced 22 hotels in a new loan totaling $985 million, as it continues to take advantage of the lending environment that will allow the REIT to save about $11 million annually in interest. The portfolio was part of a mortgage loan known as the Highland Pool loan that had an existing outstanding balance of approximately $972 million and a final maturity date of April 2021.

The new mortgage loan has a two-year initial term and five one-year extension options. The loan is interest-only and provides for a floating interest rate of LIBOR plus 3.20 percent.

It is secured by 22 hotels: Courtyard Boston Downtown, Courtyard Denver, Courtyard Gaithersburg, Courtyard Savannah, Hampton Inn Parsippany and Hilton Parsippany, both in New Jersey, Hilton Tampa, Hilton Garden Inn Austin, Hilton Garden Inn BWI, Hilton Garden Inn Virginia Beach, Hyatt  Regency Windwatch, Long Island, Hyatt Savannah, Marriott DFW Airport, Marriott Omaha, Marriott San Antonio, Marriott Sugarland, Renaissance Palm Springs, Ritz-Carlton Atlanta, Residence Inn Tampa, The Melrose and The Churchill, both in Washington, D.C., and Silversmith in Chicago.

Marriott DFW Airport
Marriott DFW Airport

“This refinancing is a successful continuation of our recent debt capital market strategies to create shareholder value by extending our loan maturity schedule as well as significantly lowering our spread, which we expect to result in substantial interest expense savings,” Douglas Kessler, Ashford Trust’s president & CEO, said in a prepared statement. “Our five most recent financings have capitalized on the attractive lending market and we believe will result in approximately $31 million of combined annual interest savings compared to the prior loan agreements.”

More refinancing deals

The latest transaction comes three months after Ashford Hospitality refinanced a mortgage loan for an eight-hotel portfolio that had an outstanding balance of $377 million for a new loan totaling $395 million and was expected to result in annual savings of about $6.5 million. That mortgage had a two-year initial term and five one-year extension options as well. It was interest-only with a floating rate of LIBOR plus 3.0 percent and was secured by hotels in California, Florida, Maryland, Minnesota, Oregon and Virginia.

The January deal followed two refinancing transactions in late October 2017, one for the Hilton Boston Back Bay that was refinanced with a $97 million loan expected to result in annual interest and principal payments savings of approximately $2.8 million. The second transaction was a $427 million refinancing secured by 17 hotels expected to save the REIT about $9.8 million annually.

Dallas-based Ashford Trust is a REIT that focuses on upper upscale, full-service hotels mainly with Marriott and Hilton brands. Its current portfolio has about 120 properties and more than 25,000 rooms.

Images courtesy of Ashford Hospitality Trust