DALLAS—Ashford Hospitality Trust continues to see success in pushing out its loan maturities, as evidenced by the US$203.4-million loan restructuring announced earlier this week.
The securitized loan, which was scheduled to mature this month, will now mature in March 2014.
Other highlights of the restructured loan are:
• A one-year extension could be available for the loan, if certain conditions are achieved.
• The rate on the loan is equal to the London Interbank Offered Rate plus 4.5% with no LIBOR floor.
• At closing, Ashford paid down the loan by US$25 million to US$178.4 million.
• A total of 85% of excess cash flow after debt service, working capital and approved capital expenditures will be used to pay down the balance of the loan.
“We’re pleased we got it done given the market conditions,” Ashford president Doug Kessler said Wednesday during a telephone interview. “It’s a very good outcome for our shareholders.”
Kessler declined to identify the banks acting as lenders for the mortgage loan, which was transferred to a special servicer.
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Restructuring maturity dates
This isn’t the first time this year Ashford has reworked the maturity dates on its leverage. The real-estate investment trust announced in September it replaced its previous credit line that was scheduled to mature in April 2012 with a new, three-year, US$105-million revolving credit facility that bears interest at 275 to 350 basis points over LIBOR, the same as the previous line.
Looking ahead, the maturity schedule related to indebtedness from the company’s continuing operations is:
2012: US$167.2 million
2013: US$146.7 million
2014: US$132.66 million
“This is a very manageable schedule of debt maturities,” Kessler said.
Total indebtedness from continuing operations is US$2.39 billion, according to the company’s third-quarter filing with the U.S. Securities and Exchange Commission.
Ashford, Kessler said, is a highly levered company. He said the company views well-managed debt as a positive because it can increase flexibility.
“We’ve tried to keep a balanced maturity schedule,” he said.
While acknowledging the “challenging” financing environment, Kessler has observed that loan allocations to the hotel industry appear to be increasing. And the REIT already has begun getting to work on restructuring debt coming due in 2012.
“We are in discussions with lenders about the maturities,” he said. “It’s still a little bit early. I wouldn’t expect us to refinance this (2012) portfolio just yet.”
As for the 2013 and 2014 debt, Kessler said Ashford “still has a fair amount of runway” yet to go before the debt comes due. Also, lenders typically are not open to restructuring debt this far in advance.
