Ashford Hospitality Trust Inc. has decided to put 62 of its hotels up for sale, which constitute about half of its holdings. In addition to upping the number of hotels it now plans to sell, the company also said it will pursue a different, and perhaps costlier, sales strategy.
Ashford previously announced plans to market a 24-property, select-service hotel portfolio in a single offering. But after it was disappointed by the values of the bids it received, the company has instead decided to sell the hotels in smaller groups, and even offer them individually.
In addition to the 24 hotels it previously announced to sell, Ashford identified an additional 38 select-service hotels it also plans to sell over time.
This past quarter, the market for large portfolios of select-service assets changed dramatically, according to Ashford. As a result, the company said it received much smaller bids for its portfolio than it was expecting.
Ashford's senior management said the offered prices did not reflect the full portfolio value for its shareholders and it pulled the portfolio off the market. Ashford said it believes the new sales process of selling the hotels in smaller numbers or individually in one-off transactions will garner higher values in the current market environment.
"We believe the best course of action is to exercise patience and pursue an opportunistic sales approach in an effort to capture full value for our attractive portfolio of select-service hotels,” said Monty J. Bennett, Ashford Trust's chairman and CEO. “We are fully committed to our refined investment strategy of focusing on upper upscale, full-service hotels and given the industry-leading insider ownership at Ashford Trust, this management team is highly aligned with investors to maximize shareholder value."
Separately, the company announced that it refinanced three mortgage loans with existing balances of approximately $268 million. The previous mortgage loans that were refinanced include:
• $91 million UBS 2 loan with a final maturity date in December 2015;
• $103 million Merrill 2 loan with a final maturity date in February 2016; and
• $74 million Merrill 7 loan with a final maturity date in February 2016.
The new loan totals $375 million and the company netted proceeds of approximately $81 million after closing costs and reserves. The next hard debt maturity for the company is in April 2017.
The previous mortgage loans were refinanced through one new mortgage loan pool with a 2-year initial term and four 1-year extension options. The new loan, which is interest-only with a floating interest rate of LIBOR + 4.87%, is secured by 17 hotels: Sheraton City Center Indianapolis, Hilton Houston Nassau Bay, Hilton St. Petersburg Waterfront, Embassy Suites Palm Beach, Embassy Suites Houston Galleria, Courtyard Crystal City Arlington, Courtyard Alpharetta, Courtyard Foothill Ranch, Residence Inn Falls Church, Residence Inn San Diego Sorrento Mesa, Embassy Suites Austin Arboretum, Embassy Suites Dallas Galleria, Embassy Suites Las Vegas Airport, Courtyard Bloomington, Hampton Inn Evansville, Residence Inn Evansville, and Hilton Garden Inn Jacksonville.