Ashford Hospitality Trust Acquires $45 Million in Mezzanine Loans
February 11 2008 - 8:00AM
Business Wire
Ashford Hospitality Trust, Inc. (NYSE: AHT) today announced it has
acquired a B-note mortgage loan totaling $38.0 million secured by
an interest in the Ritz-Carlton Key Biscayne in Miami, Florida, and
a mezzanine loan totaling $7.0 million secured by an interest in
the Hotel La Jolla in La Jolla, California, both to be funded from
on-going asset sales. The $38.0 million loan on the Ritz-Carlton
Key Biscayne was acquired for $33.0 million, or a discount to par
of 11%. The loan bears interest of 9.66% at par with a projected
yield to maturity of 12.5% to Ashford during its 10-year term. The
interest only loan is locked from prepayment and can be defeased
after the first two years of the term. Financing on the hotel
includes a $160.0 million A-note mortgage loan originated by GACC
and the $38.0 million B-note mortgage loan. Based on trailing
12-month net cash flow from the property, the debt service coverage
ratio at closing is approximately 1.10x and Ashford�s investment in
the capital structure is approximately 63% to 78% loan to value.
The borrower is a partnership between Gencom Group and TCC
Companies. The $7.0 million loan on the Hotel La Jolla bears
interest at a rate of 900 basis points over LIBOR with a three-year
term and the potential for two one-year extension options. The loan
is interest only and can be prepaid subject to yield maintenance
after 18 months. Financing on the hotel includes a $23.1 million
first mortgage loan originated by JPMorgan and the $7.0 million
mezzanine loan. Ashford received an origination fee of 1.0%. Based
on trailing 12-month net cash flow from the property, the debt
service coverage ratio at closing is approximately 0.58x and
Ashford�s investment in the capital structure is approximately 61%
to 79% loan to value. The borrower, a partnership including APMC,
Holualua, Cornerstone Communities and another individual, set aside
a $1 million mezzanine loan interest and principal reserve and
provided a guaranty of payment and a completion guarantee for $10.0
million for an extensive renovation of the hotel. Commenting on the
announcement, Monty J. Bennett, President and CEO of Ashford
Hospitality Trust, stated, �These loans demonstrate our ability to
effectively source very attractive lending opportunities consistent
with our underwriting criteria. Current market conditions and terms
are conducive to expanding this investment strategy. We continue to
seek accretive ways to recycle capital.� The Ritz-Carlton Key
Biscayne, which is managed by Marriott, is located approximately
five miles south of downtown Miami. The hotel consists of a
three-section, 14-story building and features 302 hotel rooms and
188 condominium hotel units situated throughout 12 acres. One of
only three AAA 5-Diamond properties in the Miami area, the property
features two full-service restaurants, two lounges, two outdoor
swimming pools, 11 tennis courts, fitness center and 22,500 square
feet of meeting space. The hotel also features a 20,000-square-foot
spa and salon that was recently ranked as Miami�s best spa by Conde
Nast. The property is expected to undergo a renovation in 2008. The
Hotel La Jolla, which is managed by APMC, is located approximately
10 miles north of downtown San Diego. One of the tallest buildings
in La Jolla, the 11-story, 108-room hotel features a full-service
restaurant and lounge, outdoor swimming pool and approximately
2,000 square feet of meeting space. The property is expected to
undergo a significant renovation in 2008 to position the hotel as a
high-end lifestyle boutique hotel. Ashford Hospitality Trust is a
self-administered real estate investment trust focused on investing
in the hospitality industry across all segments and at all levels
of the capital structure, including direct hotel investments, first
mortgages, mezzanine loans and sale-leaseback transactions.
Additional information can be found on the Company�s web site at
www.ahtreit.com. Certain statements and assumptions in this press
release contain or are based upon �forward-looking� information and
are being made pursuant to the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995. These
forward-looking statements are subject to risks and uncertainties.
When we use the words �will likely result,� �projected,� �may,�
�anticipate,� �estimate,� �should,� �expect,� �believe,� �intend,�
or similar expressions, we intend to identify forward-looking
statements. Such forward-looking statements include, but are not
limited to the expected unleveraged yield, the impact of the
financing on our business and future financial condition, our
business and investment strategy, our understanding of our
competition and current market trends and opportunities and
projected capital expenditures. Such statements are subject to
numerous assumptions and uncertainties, many of which are outside
Ashford�s control. These forward-looking statements are subject to
known and unknown risks and uncertainties, which could cause actual
results to differ materially from those anticipated, including,
without limitation: general volatility of the capital markets and
the market price of our common stock; changes in our business or
investment strategy; availability, terms and deployment of capital;
availability of qualified personnel; changes in our industry and
the market in which we operate, interest rates or the general
economy; and the degree and nature of our competition. These and
other risk factors are more fully discussed in Ashford�s filings
with the Securities and Exchange Commission. The forward-looking
statements included in this press release are only made as of the
date of this press release. Investors should not place undue
reliance on these forward-looking statements. We are not obligated
to publicly update or revise any forward-looking statements,
whether as a result of new information, future events or
circumstances, changes in expectations or otherwise.
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