(Bloomberg) – Ashford Hospitality Trust Inc. plans to return 19 hotels to lenders in cities including Las Vegas and Atlanta, refusing to pour more money into the properties, which are part of a $982 million mortgage pool of dollars who missed a repayment deadline in June.
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Keeping the hotels would have required a repayment of about $255 million to extend funding and $80 million in capital expenditures through 2025, Dallas-based Ashford Trust said in a statement Friday. Home equity is already negative, based on comparable sales and brokers’ views of value, the statement said.
“At this time, it appears the most likely outcome will be a consensual transfer of these hotels to the respective lenders,” the company said in the statement.
Ashford Trust has reached agreements to extend the debt of 15 other hotels in the portfolio by providing a total of $129 million in repayments, according to the statement.
With higher interest rates and falling home values, many lenders are requiring borrowers to pay off some debt or provide additional capital for home expenses in exchange for extending a maturing loan. .
Braemar Hotels & Resorts Inc., whose ultimate parent company – Ashford Inc. – is the same as Ashford Trust, agreed to make a payment of approximately $121 million in June to extend a mortgage on four hotels, reducing outstanding mortgage debt by 33% to approximately $249 million.
Through June, the value of hotels was down 3% from a recent high, compared with a 16% decline for all types of commercial properties and a 31% drop for offices, according to Green Street.
Most of the hotels that Ashford Trust expects to return to lenders “are located in markets that have seen significant headwinds throughout their post-pandemic recovery, and a number of those markets are not expected to reach the higher pre-pandemic levels before 2025 or 2026,” Ashford Trust said in the statement.
Hotels likely to be returned include properties with brands such as Residence Inn, SpringHill Suites and Marriott.
The company said that once things are settled with those hotels, the next debt installment to come is a pool of Morgan Stanley loans secured by 17 hotels and maturing in November.
“We currently believe the loan should be able to be extended with no repayment required,” Rob Hays, president and chief executive of Ashford Trust, said in the statement.
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