The new five-year term financing with a fixed interest rate of 4.44% replaced two existing loans with a combined balance of $76.8 million and a weighted average interest rate of 6.05%.
Both hotels are part of the Ashford Highland Hospitality Portfolio where Dallas-based Ashford Hospitality Trust has a 71.74% ownership interest including 100% of the loan indebtedness.
The transaction completes the refinancing of three CIGNA loans in the Highland Hospitality Portfolio.
The move, along with the recent financing on the Hilton Boston Back Bay, has helped improve Ashford’s book of business.
More specifically, according to CEO Monty Bennett, it has increased the weighted average maturity of the firm’s debt, lowered its interest expense, helped pay down more expensive debt with some of the excess proceeds, and allowed it to reserve funds for future capital expenditures.
At closing, $30 million was deposited into reserve accounts “to be used predominantly for future capital expenditures” and $3.8 million to pay down the mezzanine debt balance on the overall Highland Hospitality Portfolio.
“To capitalize on the current attractive debt capital markets," Bennett said, going forward, the self-administered real estate investment trust plans “to actively pursue” similarly attractive early refinancing opportunities.