Ashford Replaces Term Loan

Zacks

Ashford Hospitality Trust, Inc. (AHT), a real estate investment trust (:REIT), recently replaced its $167.2 million loan scheduled to mature in May 2012 with a new $135.0 million loan. The new loan is scheduled to mature in May 2014, and includes an accordion feature, which allows the company to increase the debt maturity by three additional one-year periods. The new loan provides a floating interest rate of LIBOR+ 6.50%.

The new loan is secured by nine hotels. The refinancing of the loan has unencumbered its ‘Doubletree Guest Suites’ hotel in Columbus, Ohio, which it now plans to either sell or re-finance.

The strategic move to refinance the loan is aimed at investing in more accretive opportunities, which in turn will enhance capital flexibility. The company further expects to strengthen its balance sheet and create long-term value for its shareholders.

Ashford Hospitality is focused on investing in the hospitality industry across all segments and at all levels of the capital structure. Ashford Hospitality reported first quarter 2012 funds from operations (:FFO) of 28 cents per share compared with 40 cents in the year-earlier quarter. Funds from operations, a widely used metric to gauge the performance of REITs, is obtained after adding depreciation and amortization and other non-cash expenses to net income. 

By the end of first quarter 2012, Ashford Hospitality had cash and cash equivalents of $150 million. During the first quarter of 2012, the company replaced its previous $105 million senior credit facility with a new $145 million credit facility with an option to further expand the borrowing capacity to $225 million.

Ashford Hospitality currently retains a Zacks #3 Rank, which translates into a short-term Hold rating. We are also maintaining our long-term Neutral recommendation on the stock. One of its competitors, Host Hotels & Resorts Inc (HST) holds a Zacks #2 Rank , which translates into a Buy rating.

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