Cygnus Capital, an activist investor group once pushing for a change of executive leadership on the board of Ashford Hospitality Trust, is withdrawing its plan to take over the real estate investment trust because of litigation costs.

Cygnus Capital, based in Atlanta, is also withdrawing the nominations it made to Ashford Hospitality's board last month, according to a Tuesday filing with the Securities and Exchange Commission. Cygnus Capital said pursuing a takeover would be "cost prohibitive." Cygnus Capital CEO Christopher Swann did not immediately return a media request from CoStar News seeking additional comment.

A spokesman for Ashford Hospitality said the Texas-based hotelier plans to focus on navigating the pandemic and challenges in the industry. Ashford Hospitality recently negotiated forbearance agreements on the vast majority of its real estate debt, converted over 30% of its outstanding preferred shares into common stock, and raised up to $450 million, the spokesman said.

"The company is focused on navigating through the continued challenges of the pandemic and has successfully taken steps to strengthen its balance sheet and improve long-term performance," the spokesman said.

With the capital raise, coupled by the operational strategies to increase the profitability and productivity of Ashford Hospitality's portfolio totaling 103 hotels with 22,592 rooms in the United States, the company expects to weather the recovery in the hospitality industry, the spokesman added.

Cygnus Capital had been pushing for a change in executive leadership on the REIT's board after alleging the real estate investment trust had destroyed the value of its shares. Those allegations led to Ashford Hospitality filing a lawsuit in January in the U.S. District Court for the Northern District of Texas in Dallas against Cygnus Capital in which the focus of the lawsuit was tied to activist investor group allegedly breaking its REIT ownership rules and improperly attempting to seize control of the company.

Ashford Hospitality said it filed the lawsuit to prevent what it believed to be an illegal proxy contest to seize control of the board of directors during the economic challenges facing the hospitality industry tied to the pandemic. The lawsuit remains pending in the district court.

Kamal Jafarnia, chairman of Ashford Hospitality's corporate governance committee, said the REIT took the legal action last month as a "last resort" to protect its shareholders.

“We are pleased that Cygnus has abandoned its unlawful attempt to take over the company," Jafarnia said in a statement. "The board and management team will continue to focus on positioning the company for renewed growth and value creation as the recovery approaches.”

Cadwalader, Wickersham & Taft LLP and Thompson & Knight LLP are advising Ashford Hospitality as legal counsel. Olshan Frome Wolosky LLP is representing Cygnus Capital.