Ashford Reinstates Share Repurchases - Analyst Blog
September 29 2011 - 1:30PM
Zacks
Ashford Hospitality Trust Inc. (AHT), a lodging
real estate investment trust (REIT) in the U.S., has recently
reinstated its Stock Repurchase Program to facilitate a selective
purchase of its common stock over a given time period.
The strategic move is aimed at capitalizing on the current
market fundamentals by mopping out some of the common stock of the
company at a relatively low price, as the shares are presently
undervalued due to the volatility in the
market.
In concurrence with the current share repurchase program,
Ashford would be entitled to buy back up to $200 million worth of
its stock (excluding fees, commissions and all other ancillary
expenses) in the open market and negotiated purchases.
Given the present dislocations in the market, management felt
that buying back common shares at a low price would be one of the
best investment alternatives for the company. In addition, the
share repurchase program would also enable the company to make
discounted purchases of its outstanding debt obligations.
Ashford intends to fund share repurchases or discounted debt
purchases with net proceeds from asset sales, cash flow from
operations, existing cash on its balance sheet, and available
credit. 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 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 customer experience.
We currently have a Neutral rating on Ashford, which presently
has a Zacks #3 Rank translating into a short-term Hold
recommendation. We also have a Neutral rating and a Zacks #3 Rank
for Host Hotels & Resorts Inc. (HST), one of
the competitors of Ashford.
ASHFORD HOSPTLY (AHT): Free Stock Analysis Report
HOST HOTEL&RSRT (HST): Free Stock Analysis Report
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