ASHFORD HOSPITALITY TRUST PROVIDES UPDATE ON PLAN TO PAY OFF STRATEGIC FINANCING
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Insights
The strategic financing repayment plan announced by Ashford Hospitality Trust signals a proactive approach to managing the company's debt obligations. By leveraging asset sales, mortgage debt refinancings and capital raising, the company is aiming to improve its financial position ahead of the 2026 maturity date. The success of this plan hinges on the market's reception to the hotel assets for sale and the terms of refinancing.
Investors should note the potential for improved liquidity and reduced leverage, which can enhance the company's credit profile and possibly lead to more favorable borrowing terms in the future. However, the execution risk remains, as the company acknowledges that not all assets may be sold. Furthermore, the actual proceeds from asset sales and refinancings will be critical in determining the impact on the company's balance sheet.
The selection of properties listed for sale by Ashford Hospitality Trust reflects a strategic choice to capitalize on high-value assets in diverse locations. The geographic spread across major cities and tourist destinations could attract a range of buyers, potentially maximizing sale proceeds. Real estate investment trusts (REITs) like Ashford Trust often utilize such asset rotation strategies to optimize their portfolios.
However, the real estate market's current conditions, including interest rates and hospitality sector performance, will significantly influence the valuation and desirability of these properties. Investors should consider the broader market trends that may affect the timing and success of these sales, including travel demand patterns and economic indicators relevant to the hospitality industry.
Ashford Hospitality Trust's diversified hotel portfolio is a strength that can potentially buffer against regional market fluctuations. The company's focus on upper upscale, full-service hotels caters to a segment that may exhibit resilience or even growth, depending on economic conditions and travel trends. The ability to outperform, as stated by the CEO, will depend on the strategic management of these assets and the optimization of their revenue-generating potential.
Monitoring competitor performance and consumer preferences within the hospitality sector will be essential to understand Ashford Trust's market positioning. The anticipated 'excess proceeds' from refinancing and asset sales suggest a positive outlook, but it is important to benchmark these expectations against industry norms and recent transactions to contextualize the company's performance.
The Company currently has several assets at various stages of being available for sale:
- 390-room Hilton Boston Back Bay –
Boston, MA - 444-room Ritz-Carlton Atlanta –
Atlanta, GA - 296-room Westin Princeton –
Princeton, NJ - 351-room Hyatt Savannah –
Savannah, GA - 193-room One Ocean –
Atlantic Beach, FL - 350-room Residence Inn Sea World Orlando –
Orlando, FL - 144-room Residence Inn Salt Lake City –
Salt Lake City, UT - 168-room Courtyard Overland Park –
Overland Park, KS - 90-room Courtyard Manchester –
Manchester, CT - 86-room Hampton Inn Lawrenceville –
Lawrenceville, GA - 90-room SpringHill Suites Kennesaw –
Kennesaw, GA - 87-room Fairfield Inn Kennesaw –
Kennesaw, GA
Through these asset sales the Company intends to generate incremental proceeds which will be used: 1) to pay down the strategic financing, 2) to deleverage the balance sheet, and 3) for general corporate purposes. The Company is unlikely to sell all of these assets, but plans to determine which assets are capturing the most attractive valuations and providing sufficient proceeds levels above allocated debt balances and mortgage release prices.
The Company is also working with lenders to refinance its loan secured by the Renaissance Nashville in
"As we enter 2024, we are focused on paying off our strategic corporate financing," commented Rob Hays, Ashford Trust's President and Chief Executive Officer. "Between the excess proceeds from planned asset sales, excess proceeds from planned property refinancings, and proceeds from our non-traded preferred capital raise, we believe we have a viable path to pay off our strategic financing this year. Our hotel portfolio also continues to benefit from its geographic diversification, and I believe we are well-positioned to continue to outperform."
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.
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