The COVID-19 pandemic has caused massive disruption to many different industries and fields, with travel, tourism, and hospitality all suffering greatly for it. Especially with lockdowns and travel restrictions being in place, hotels and other travel or tourism-based projects have been put on hold indefinitely for many different companies. As a result, many businesses specifically created to develop and finance real estate projects have not been investing or have been lacking funding or loans in order to carry out these endeavors.
However, this tide is beginning to change. With the advent of widespread COVID-19 vaccines being distributed across the globe, many analysts have become far more optimistic on the near future moving into 2021 and beyond. Ashford Hospitality Trust has been a benefactor of this renewed optimism, securing corporate financing from Oaktree Capital Management. Now that the company has secured money, what exactly does Ashford Hospitality Trust do, what kind of financing did the company receive, and what can be expected from them in the future?
What Is Ashford Hospitality Trust?
Ashford Hospitality Trust is a real estate investment trust that focuses mostly on investments and development of high-quality full-service hotels. The company is based in Dallas, Texas, and went public on the New York Stock Exchange in 2003. Ashford’s stock is currently worth $2.76 per share and has a market cap of about $146.85 million.
The company has helped develop a wide range of hotels scaling from “upper midscale” all the way up to “luxury.” In total, the company’s portfolio boasts 104 different hotels in dozens of states around the nation. Notable names in their business portfolio include One Ocean in Atlantic Beach, Florida, the Ritz-Carlton Atlanta, and a wide range of Embassy Suites, Hiltons, and Marriots.
The company has also developed and launched an app that offers hospitality industry research, SEC filings, webcasts, and audio recordings of conference calls and presentations. The app is built for investors and users looking to understand the real estate business and hospitality market, especially about Ashford Hospitality Trust.
The company’s current business model, however, does in fact rely on the development of new properties, which have hit a snag in 2020 due to the COVID-19 pandemic. As a result, there have been issues with liquidity and general operations that needed to be quelled. This is where Oaktree Capital Management comes into play.
Ashford Hospitality Trust recently announced that the company has secured a strategic financing commitment from Oaktree Capital Management. This will be manifested in the form of a $200 million senior secured loan, which can be upsized by an additional $150 million for a net total of $350 million. The loan has a three-year term with the possibility for two different one-year extensions.
Ashford Hospitality Trust plans to use this multi-million dollar loan for a few different purposes but mainly for strengthening its balance sheet, increasing liquidity, and covering general corporate expenses. This new loan should help their business recover from the difficulties involved with the current real estate market. It should also properly prepare the company for the future, especially as the United States begins to open up for business once again.
Ashford Hospitality Trust has a diverse portfolio of hotels comparable to many of the best in the world. With new developments and investments awaiting 2021, the company should be able to do quite well — especially as the travel and tourism market recovers. Ashford Hospitality Trust should continue to move in the right direction until the economy rebounds to pre-pandemic levels with the addition of this new loan.
Tom Price is a writer focusing on Entertainment and Sports Features. He has a degree from NYU in English with a minor in Creative Writing. He has been previously published for Washington Square News, Dignitas, CBR, and Numbers on the Boards.