Ashford Hospitality Trust announced Monday it had secured a minimum $200 million in secured financing from OakTree Capital Management — a week after it
The Dallas-based firm’s financing commitment from Oaktree allows for a potential upsizing to $350 million, according to a registration filing with the Securities and Exchange Commission.
"We're encouraged by the news regarding vaccines and believe this strategic financing commitment provides substantial capital and ample liquidity for Ashford Trust to capitalize on the upcoming recovery in the hospitality industry," stated J. Robison Hays, Ashford Trust's president and chief executive officer.
The loan’s proceeds from the Los Angeles-based credit investor will boost Ashford’s balance sheet and cash reserves, according to Ashford. It was issued with a three-year term with two one-year extensions.
According to data from research firm Trepp, Ashford is a sponsor behind $1.74 billion in commercial mortgage-backed securities across 18 notes.
Ashford owns more than 100 luxury, resort-style hotel properties — the type which have suffered severe losses due to a drop in global tourism and business travel from the COVID-19 pandemic. Making hotels particularly vulnerable is the shrinkage of short-term lease revenue used to support long-term operating and financing costs that remain in place.
While the company has drastically cut costs (nearly 71% in labor expenses alone) since the second quarter, and did away with such perks as complimentary food and beverages for guests, it still faces large debt-service costs of nearly $17 million a month and near-term estimates of up to $20 million in total operating revenue shortfalls.
The company was initially granted a $68 million loan in May through the Paycheck Protection Program established in coronavirus relief efforts from Congress, but later
The company stated in a Dec. 21 SEC filing it only had enough cash on hand to support operations into the early part of 2021, requiring either a bridge loan, asset sales or the possible bankruptcy.
The company said it was seeking $200 million, offering up a 20% equity stake in the firm in exchange.
