DALLAS-With an eye on reducing debt costs, Ashford Hospitality Trust Inc. has secured another $210.8 million from Merrill Lynch Mortgage Lending Inc. The 10-year loan has been teamed with a $370-million loan, taken out four months ago with the New York City lender.
The Dallas-based Ashford's next step was to split the combined loans into seven pools with two maturity dates and lower interest rates than the 6.82% that it assumed in March in a 21-hotel portfolio buy. According to Ashford's press release, four pools, totaling $286.1 million, will mature in 2015; they carry a 5.26% blended rate. The other three set up a $294.6 million fund that matures in 2016 at a blended rate of 5.53%. Under the terms, Ashford will make interest-only payments for five years followed by a principal amortization with a 25-year schedule. Ashford could not be reached by publication time for comment.
The new loan effectively refinances $129.9 million of securitized debt from the $250-million deal with Fisher Brothers, Gordon Getty Trust, George Soros and Ashford's senior management. The assumed loans, set to mature between 2008 and 2011, had a weighted average interest of 6.82%.
As a result of the financial maneuver, Ashford says it will incur a one-time expense of $7.4 million or 12 cents per diluted share in the fourth quarter. "An important component of Ashford's investment strategy is to continue to lower our borrowing costs by taking advantage of the low rates at the long end of the yield curve," Monty J. Bennett, Ashford's president and CEO, says in the release.
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