Ashford Hospitality Trust, a real estate investment trust with a portfolio of U.S. hotels that has been struggling financially since the onset of the pandemic, is considering strategic alternatives that include a potential sale.
The Dallas-based REIT's board of directors formed a special committee to evaluate alternatives to its business. Ashford has been selling off some properties in its 67-hotel portfolio in an effort to deleverage its business that had $2.6 billion in loans as of the end of the last quarter.
The REIT has been "highly encouraged" by its success to date in strengthening its balance sheet and strategically selling assets, said President and CEO Stephen Zsigray in a Tuesday statement.
“However, we remain frustrated by the discrepancy between the value of our underlying portfolio and the market value of our common stock, and the board has tasked the special committee with proactively exploring alternatives to bridge that gap," Zsigray added.
Zsigray did not immediately respond to an emailed request for additional information on the strategic alternatives being considered by the board's special committee.
In conjunction with the formation of this committee, Ashford has terminated its current offering of its series L and M non-traded preferred stock and suspended redemptions for all of its outstanding non-traded preferred stock, officials said.
Ashford recently announced it would sell three hotels, including Le Pavillon in New Orleans and the Embassy Suites Austin Arboretum and the Embassy Suites by Hilton Houston near the Galleria in deals totaling $69.5 million. The proceeds of the November deals are expected to help retire debt.
Based on current mortgage interest rates, officials said the REIT expects to gain more than $2 million in annual cash flow and $14.5 million in future capital expenditure savings as a result of the hotel sales.