Ashford Hospitality Trust Acquires $17.5 Million Senior Mezzanine Loan Participation in 29-Hotel Portfolio
February 19 2008 - 8:00AM
Business Wire
Ashford Hospitality Trust, Inc. (NYSE: AHT) today announced that
its joint venture with PREI has acquired a senior mezzanine loan
secured by a 29-hotel portfolio of full- and select-service hotels
owned by affiliates of JER Partners. Ashford�s 25% of the joint
venture investment equals $17.5 million and is priced to yield
approximately 17.9% based upon the purchase price discount to par,
the forward LIBOR curve through the initial maturity of the loan,
and the joint venture promote. The interest only loan, with an
initial term of three years from origination, has the potential for
two one-year extension options. The loan can be prepaid with
penalty during the first two years and is open to prepayment
without penalty thereafter. Based on trailing 12-month net cash
flow from the property, the debt service coverage ratio at closing
is approximately 1.72x and the investment in the capital structure
is approximately 68% to 72% loan to cost. The borrower has invested
$444.2 million of equity in this transaction including $347.1
million of cash and capital improvement reserves of $97 million.
Commenting on the announcement, Monty J. Bennett, President and CEO
of Ashford Hospitality Trust, stated, "This transaction exemplifies
key characteristics of our lending platform that are unique among
our peer group. The joint venture structure and timing resulted in
a very attractive return for our shareholders while making a more
secure investment in the capital structure of the overall loan.
Other attractive features of this loan are: strong sponsorship and
equity in the portfolio, geographic diversity across major urban
markets, and market leading brands. Given current pricing in the
market for loans that are consistent with our investment criteria,
we anticipate continued capital recycling from asset sales into
higher yielding loans." The loan portfolio includes 22 full-service
hotels totaling 7,307 rooms and 7 select-service hotels totaling
1,326 rooms. Hotel managers include Ritz-Carlton, Hilton, Marriott,
Hyatt, Crestline and McKibbon. Located among 14 states and the
District of Columbia, the portfolio has a significant concentration
in urban markets and is predominantly comprised of luxury and
upper-upscale properties with brands such as Ritz-Carlton, Hyatt,
Hilton and Renaissance. The select-service hotels consist of brands
such as Hilton Garden Inn, Hampton Inn and Residence Inn. 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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