Dallas-based real estate investment trust (REIT) Ashford Hospitality Trust has recently made the decision to hand over possession and control of 14 hotels back to the loan servicers. This move comes after Ashford initially announced last July that it planned to return the keys of 19 underperforming hotels to its loan servicers. The decision was finalized in December, with the transfer to lenders involving hotels located in various states such as Arizona, California, Georgia, New Jersey, and North Carolina.
Ashford stated that since July, it has been actively cooperating with the servicer for a consensual foreclosure or deed in lieu of foreclosure on these underperforming properties. The REIT made it clear that as a result of the transfer, it no longer holds any economic interest in the operations of the hotels in question. The 14 hotels are divided into two loan pools: a $180.7 million “Keys A” loan pool and a $174.4 million “Keys B” loan pool.
The hotels included in the “Keys A” loan pool are Courtyard Columbus Tipton Lakes in Columbus, Indiana; Courtyard Old Town in Scottsdale, Arizona; Residence Inn Hughes Center in Las Vegas; Residence Inn Phoenix Airport in Phoenix; Residence Inn San Jose Newark in Newark, California; SpringHill Suites Manhattan Beach in Hawthorne, California; and SpringHill Suites Plymouth Meeting in Plymouth Meeting, Pennsylvania. On the other hand, the hotels in the “Keys B” loan pool consist of Courtyard Basking Ridge in Basking Ridge, New Jersey; Courtyard Newark Silicon Valley in Newark, California; Courtyard Oakland Airport in Oakland, California; Courtyard Plano Legacy Park in Plano, Texas; Residence Inn Plano in Plano, Texas; SpringHill Suites BWI Airport in Baltimore; and TownePlace Suites Manhattan Beach in Hawthorne, California.
Ashford announced during its fourth-quarter earnings call in late February that it had reached a definitive agreement to sell the 390-key Hilton Boston Back Bay to an undisclosed buyer for $171 million. The company also revealed operating losses of $13.3 million for the fourth quarter and $31.3 million for 2023. This move is expected to have a significant impact on Ashford’s financial standing and future operations in the hotel industry.
The decision by Ashford Hospitality Trust to hand over possession of 14 hotels signifies a strategic move to mitigate losses and streamline its operations. The transfer of these properties to loan servicers marks a turning point for the REIT and could potentially lead to further changes in its portfolio and investment strategy in the future. As the hotel industry continues to navigate challenges brought about by the COVID-19 pandemic, it will be interesting to see how Ashford adapts and evolves in response to these shifting market dynamics.
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