Ashford Hospitality Trust refinanced two maturing hotel loans into one non-recourse loan totaling $98.5 million.
The Dallas-based hotel real estate investment trust refinanced loans for the 157-room La Posada de Santa Fe, a Tribute Portfolio Resort & Spa, and the 252-room Hilton Alexandria Old Town, according to a news release. The two hotel loans were the company’s last debt maturities in 2023.
The new loan has a three-year initial term with two, one-year extension options. The loan is interest-only, and it has a floating interest rate of SOFR plus 4%.
“We are very pleased to complete the refinancing of these loans during a challenging time in the hotel financing market,” Ashford Trust President and CEO Rob Hays said in the release. “Importantly, this refinancing did not require any paydown from the previous loan balances and pushes out the maturities. We continue to focus on our upcoming extension tests and believe our portfolio is well-positioned to outperform.”
During the company’s first-quarter earnings call, Hays spoke about the challenging deals and refinancing environment. Capital recycling remains an important part of the REIT’s strategy, but the transaction market is soft given where the debt markets are.
Ashford Trust has $442 million of working capital after extending two of its loans through next year following paydowns totaling $95 million. At the time, the company was still negotiating the two loan maturities it has now refinanced.
“The challenging debt financing markets for hotels have been around for months now and they are not getting any better,” he told investors. “The spreads are historically wide and I’m hopeful we are getting to the end of the Fed raising rates. It’s a weird dynamic. Hotels are performing well, but there’s a disconnect between the capital markets and the underlying fundamentals.”
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