Ashford Borrows $210M to Grow, Restructure Debt

Ashford describes the deal as part of a series of secured financings that will add capacity to the company's investment program, reduce its average borrowing cost on its floating rate debt by more than 130 basis points, and pay down its existing $60-million line of credit. The company expects to close this month on the $210-million term loan with Merrill Lynch, which is secured by 25 hotel properties. The loan bears interest at 195 basis points over Libor, with a maturity date of August 2006. The debt is interest only and has three one-year extension options.

Ashford anticipates using the proceeds of the loan to repay two mortgage notes totaling approximately $26 million at a rate of 350 basis points over Libor and to repay another mortgage loan of $31 million at a rate of 325 basis points over Libor. It will also pay down the $60-million line of credit facility by approximately $57 million and partially repay another mortgage note by approximately $10 million. The REIT will also use proceeds of the $210 million to partially fund its recently announced Dunn Hospitality portfolio, with remaining proceeds to fund future acquisitions.