2023-07-10 17:12:06 ET
Ashford Hospitality Trust ( NYSE: AHT ) stock dropped 2.0% in Monday trading after the REIT disclosed late Friday that it will "most likely" will transfer the ownership of 19 hotels to respective lenders.
"In the interest of protecting stockholder value and liquidity, the company has elected not to make the required paydowns to extend" three KEYS pool loans, which are secured by 19 properties, it said.
"The company believes it's in the best interest of its common and preferred stockholders to not make the required paydown of approximately $255M for the non-extended KEYS Hotels," it added. Based on estimates of hotel values and supported by recent comparable transactions and brokers' opinion of values, the REIT believes that the non-extended KEYS Hotels have negative equity value.
It addition, Ashford Trust ( AHT ) expects to save ~$80M in capital expenditures at that group of hotels.
"The combination of the paydowns and the removal of the debt associated with the pools we are not extending will lower our debt by approximately $700 million, or more than 18%," said Ashford Trust ( AHT ) President and CEO Rob Hays.
The company did extend its KEYS Pool C loan, secured by five hotels with a paydown of $62M; KEYS Pool D loan, secured by five hotes with a paydown of $26M; and KEYS Pool E loan, secured by five hotels with a paydown of $41M.
Note that as of Sept. 15, 2022, the SA Quant system flagged Ashford Hospitality Trust ( AHT ) at high risk of performing poorly due to inferior profitability and declining growth. YTD, AHT stock has dropped 12% compared with the S&P 500's gain of 15%.
For Recent Analysis on AHT:
- Ashford Hospitality's 12% Preferreds: You Can Check Out Any Time You Like
- Ashford Hospitality Trust: Substantial Debt, No Dividends
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Ashford Hospitality Trust 'most likely' to transfer 19 hotels to lenders