About two weeks ago, the Dallas-based REIT, led by president Monty Bennett, inked a purchase agreement with Security Capital Preferred Growth Inc. for a double tranche private placement of up to $75 million of preferred stock. Ashford's executive team is unable to comment due to legal restrictions of the capital-raising campaign to buy the 4,094-room portfolio from affiliates of the Fisher Brothers, Gordon Getty Trust and billionaire George Soros. A company spokesman did say there is no deadline at this time for the offering to close. Ashford's stock yesterday closed at $10.16 per share on the NYSE.
The underwriters also have 30 days to exercise an option to buy another 1.1 million shares under the follow-on offering's terms, which bar other sales for 45 days except for Security Capital's. Wachovia Securities and Friedman Billings Ramsay are the joint book-running managers for the follow-on. AG Edwards, Legg Mason Wood Walker Inc., Calyon, JMP Securities and Stiefl, Nicolaus & Co. are co-managers.
Besides funding the cash portion, the follow-on capital will be used to trim $14.7 million from the portfolio's outstanding debt so that the REIT will be assuming $164.7 million at the closing. The follow-on also earmarks $18 million for the REIT's credit facility balance with Wachovia Capital Markets LLC and Calyon Securities (USA) Inc., which is set to mature in August 2007, according to an SEC prospectus filed yesterday. The portfolio sellers also will get $50.3 million in units of limited partnership interest in Ashford's operating partnership. For previous story, click here.
As the 21-hotel portfolio purchase pushes toward closing, Ashford is evaluating "strategic alternatives" for eight hotels, with 995 rooms and labeled as non-core. The properties are located in Dallas; Coral Gables, FL; Warner Robins, GA; Commack and Westbury, NY; and South Yarmouth, Falmouth and Hyannis, MA.
If the sale closes, Ashford's portfolio will jump to 54 hotels with 9,189 rooms and $79 million of debt investments since the IPO launch in August 2003. The package predominately is upscale and upper upscale from the Marriott, Hilton, Hyatt and Starwood lines.
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