Ashford Obtains New Credit Facility - Analyst Blog
September 28 2011 - 1:14PM
Zacks
Ashford Hospitality Trust Inc. (AHT), a lodging
real estate investment trust (REIT) in the U.S., has recently
obtained a new senior credit facility to replace its existing
credit line that was scheduled to mature in April 2012. The
investment banking division of KeyCorp (KEY) acted
as the lead arranger for the transaction.
The new three-year revolving credit facility worth $105 million
bears an interest at 275 to 350 basis points over LIBOR, which is
identical to that of the erstwhile line of credit. The credit
facility has an accordion feature that would enable Ashford to
increase the borrowing capacity to $150 million. In addition, the
company could also extend the maturity of the credit facility by an
additional year subject to the fulfillment of certain
conditions.
The new credit line provides greater financial flexibility to
Ashford to address any upcoming debt maturities as well as utilize
the cash for other corporate purposes such as opportunistic
purchases and other hotel-related investments. By the end of second
quarter 2011, the company had a staggering debt burden of
approximately $2.4 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
company seeks to own assets in some of the premium markets of the
country at discounted prices as property prices have nose-dived in
the last couple of years.
Ashford also has a well-experienced management team that brings
to the 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 customer experience.
We currently have a Neutral rating on Ashford, which presently
has a Zacks #3 Rank that translates into a short-term Hold
recommendation.
ASHFORD HOSPTLY (AHT): Free Stock Analysis Report
KEYCORP NEW (KEY): Free Stock Analysis Report
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