ASHFORD HOSPITALITY TRUST ANNOUNCES PROGRESS IN PLAN TO PAY OFF STRATEGIC FINANCING WITH CLOSING OF SALE OF THE HILTON BOSTON BACK BAY
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Insights
The divestiture of the Hilton Boston Back Bay by Ashford Hospitality Trust represents a significant transaction within the hotel real estate sector. The sale price of $171 million, or $438,000 per key, is indicative of the asset's high valuation within a prime urban market. This transaction is reflective of the current trends where strategic asset sales are utilized to improve balance sheets, particularly in reducing leverage.
From a real estate investment perspective, the deployment of sale proceeds to pay down debt is a prudent move, especially considering the company's strategic financing obligations. The reduction of the strategic financing balance to $112 million is a substantial deleveraging step. This move aligns with conservative financial management practices that are favored by investors, as it may lead to improved credit ratings and reduced interest expense, potentially increasing the REIT's financial flexibility.
Furthermore, the announcement that the company plans to continue this strategy by using proceeds from the sale of non-traded preferred stock and other asset sales to make regular paydowns is an important signal to the market. It suggests a disciplined approach to capital management and a commitment to strengthening the company's financial position over time.
The sale of a high-profile property such as the Hilton Boston Back Bay is not only a significant financial event but also a marker of industry health and investor sentiment. The per-key price achieved is a benchmark for the market, which other players in the hospitality industry will watch closely. It serves as a barometer for the valuation of similar upscale, full-service hotels in urban centers.
Moreover, the strategic move by Ashford Hospitality Trust to reduce debt and streamline its portfolio is in line with broader industry trends. As travel and hospitality recover from the impacts of global disruptions, such as the pandemic, there is a renewed focus on financial resilience and asset performance. Investors and stakeholders can interpret the successful sale at an attractive value as a positive indicator of recovery and a testament to the underlying value of well-located hospitality assets.
The mention of ongoing sales processes for several assets suggests that the company is in an active portfolio optimization phase, which could lead to further reshaping of its holdings and impact the market dynamics for hotel properties.
From a financial perspective, the transaction has immediate implications for Ashford Hospitality Trust's liquidity and debt profile. The use of sale proceeds for debt reduction is a strategic move that can enhance shareholder value by improving the company's balance sheet and reducing financial risk. The mention of non-traded preferred stock as a source of funds for future debt paydowns also highlights the company's commitment to diversifying its capital structure and accessing alternative financing sources.
Investors will likely view the reduction in leverage positively, as it can lead to a lower cost of capital and potentially higher distributions in the future. Additionally, the company's proactive approach to debt management may be seen as a defensive strategy against potential market volatility or economic downturns, which can be particularly impactful in the hospitality sector.
Overall, the sale of the Hilton Boston Back Bay and subsequent debt reduction measures can be seen as a strategic maneuver to position Ashford Hospitality Trust for sustainable growth and resilience in the face of an evolving market landscape.
"We are pleased to announce the closing of the sale of the Hilton Boston Back Bay for a very attractive value and the significant progress we've made in paying down our strategic financing," commented Rob Hays, Ashford Trust's President and Chief Executive Officer. "With this recent paydown, the remaining balance on our strategic financing is now approximately
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Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing predominantly in upper upscale, full-service hotels.
Forward-Looking Statements
Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release include, among others, statements about the Company's strategy and future plans, including its plans to raise capital through a combination of asset sales, mortgage debt refinancings and non-traded preferred capital raising and to pay off its strategic financing. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," "could," "plan," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside of Ashford Trust's control.
These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: our ability to raise sufficient capital to pay off our strategic debt; our ability to repay, refinance, or restructure our debt and the debt of certain of our subsidiaries; anticipated or expected purchases or sales of assets; our projected operating results; completion of any pending transactions; our understanding of our competition; market trends; projected capital expenditures; the impact of technology on our operations and business; general volatility of the capital markets and the market price of our common stock and preferred stock; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the markets in which we operate, interest rates or the general economy; and the degree and nature of our competition. These and other risk factors are more fully discussed in Ashford Trust's filings with the Securities and Exchange Commission.
The forward-looking statements included in this press release are made only as of the date of this press release. Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance taking into account all information currently known to us. These beliefs, assumptions, and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans, and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider these risks when you make an investment decision concerning our securities. Investors should not place undue reliance on these forward-looking statements. The Company can give no assurance that these forward-looking statements will be attained or that any deviation will not occur. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations, or otherwise, except to the extent required by law.
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SOURCE Ashford Hospitality Trust, Inc.
FAQ
What is the recent sale announced by Ashford Hospitality Trust, Inc. (NYSE: AHT)?
How much debt reduction was achieved through the sale?
What are the Company's plans for further debt reduction?
What is Ashford Hospitality Trust's focus as a real estate investment trust (REIT)?
Who commented on the sale of the Hilton Boston Back Bay?
