Oaktree throws beleaguered Ashford Hospitality a $350M lifeline

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Hotel REIT Ashford Hospitality Trust has been thrown a $350
million lifeline by Blackstone-owned Oaktree Capital.

The company announced that is has secured a $200 senior
secured term loan for Oaktree along with a commitment to upsize the loan by another
$150 million.

“We’re encouraged by the news regarding vaccines and believe this strategic financing commitment provides substantial capital and ample liquidity for Ashford Trust to capitalize on the upcoming recovery in the hospitality industry,” said J. Robison Hays, Ashford Trust’s President and CEO.

J. ROBISON HAYS

“We’ve had great success in our forbearance efforts and
we continue to take aggressive measures to optimize our properties as well as
enhance our operational and financial flexibility.”

The Dallas-based upscale hotel owner has been teetering on the brink of bankruptcy for months as the pandemic has eviscerated the global hospitality sector. In September, it sold its only Manhattan hotel, the Embassy Suites in Times Square pictured top, for almost half what it paid for it in 2019.

Magna Hospitality Group paid $115 million for the 310-key
hotel at 60 West 37th Street – $30 million less than Ashford’s mortgage on the
property.

As its share’s nosedived, Ashford managed to sign
forbearance agreements on over $1 billion in loans it holds on 61 hotels.

On Monday,  Hays said
that, with Oaktree’s help, he believes the company can survive the pandemic.

“We believe that our portfolio is not only well-positioned
as we come out of this pandemic, but Ashford Trust now has a sound balance
sheet and sufficient capital resources to successfully navigate the pandemic
and pursue long-term growth,” said the CEO.

The new loan has a three-year term with two, one-year
extension options. It allows the company the option to accrue (and not pay in
cash) the interest expense for up to two years, and Oaktree will be eligible to
receive an exit fee that may be paid by the company in either cash or warrants.

Ashford Trust said the money will strengthen its balance
sheet, increase liquidity and fund general corporate business.

RBC Capital Markets, LLC served as the company’s financial advisor on the transaction, and Weil, Gotshal & Manges LLP and Cadwalader, Wickersham & Taft LLP served as legal counsel.

In 2019, Brookfield Asset Management acquired a 61.2 percent
interest in Oaktree,  a global
alternative investment management firm with $140 billion in assets under
management.

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