Ashford Mulls Secondary Offering - Analyst Blog
June 29 2011 - 10:00AM
Zacks
Ashford Hospitality Trust
Inc. (AHT), the second largest lodging real estate
investment trust (REIT) in the U.S., has recently announced its
decision to issue 6.0 million common shares to raise cash and repay
its debt. The company will also grant the underwriters an option to
purchase an additional 0.9 million shares to cover any
over-allotments.
Morgan Stanley
(MS) – a global financial services firm; KeyBanc Capital Markets –
the investment banking division of KeyCorp (KEY);
UBS Securities LLC, a subsidiary of UBS AG (UBS);
and Credit Suisse Securities (USA) LLC – the investment banking
division of Credit Suisse Group (CS) are acting as
joint book-running managers for the public offering.
Ashford intends to utilize the
proceeds from the secondary offering to repay debt under its senior
credit facility and for other corporate purposes such as
acquisition and other hotel-related investments. By the end of
first quarter 2011, the company had a staggering debt burden of
approximately $1.1 billion, primarily due to its acquisition
binge.
Ashford has continually focused on
acquiring upper-upscale and luxury hotels in diversified markets
throughout the U.S. The acquisition spree is part of the long-term
strategy of the company to own assets in some of the premium
markets of the country at discounted prices as property prices has
nose-dived in the last couple of years.
Ashford also has a well-experienced
management team that puts on board a unique perspective to hotel
investment sourcing, underwriting, asset managing, selling, and
financing. The company’s proactive asset management strategy
further provides the flexibility to adapt to the changing market
conditions to maximize operating margins and enhance the customer
experience.
We currently have a ‘Neutral’
rating on Ashford, which presently has a Zacks #3 Rank translating
into a short-term ‘Hold’ recommendation.
ASHFORD HOSPTLY (AHT): Free Stock Analysis Report
CREDIT SUISSE (CS): Free Stock Analysis Report
KEYCORP NEW (KEY): Free Stock Analysis Report
MORGAN STANLEY (MS): Free Stock Analysis Report
UBS AG (UBS): Free Stock Analysis Report
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