BofA to Lead $1 Billion Ashford Hotel Loan
Ashford Hospitality has tapped Bank of America to lead a roughly $1 billion floating-rate debt package on 22 hotels.
BofA will fund half of the balance, with Morgan Stanley and Barclays each supplying 25%. The three banks will securitize the senior portion — likely about $800 million — in a stand-alone offering.
Ashford will use the loan proceeds to retire the roughly $970 million balance on a $1.1 billion debt package that it lined up from Credit Suisse three years ago. That debt package has a two-year term and four one-year extension options, the first of which was exercised last April.
The debt package was originally backed by 24 hotels with 6,530 rooms. Ashford subsequently sold two of the properties and paid down some debt. The remaining hotels have 5,730 rooms. Among them are the 315-room Courtyard Boston Downtown, the 300-room Marriott Sugar Land in Sugar Land, Texas, and the 240-room Melrose in Washington.
Credit Suisse securitized the senior $775 million portion of the debt package via a stand-alone offering (CSMC 2015-DEAL). The remaining $295.6 million was carved into four mezzanine tranches, most of which were placed with investors, including American Equity Investment Life, Apollo Global affiliates, MKP Capital, Starwood Property and Structured Annuity Reinsurance. Credit Suisse retained small slices of each tranche.
The properties, which fly a variety of national flags, are mostly in the full-service category, with a few select-service and limited-service hotels mixed in. They were originally part of a 28-property portfolio owned by Highland Hospitality of McLean, Va. In 2007, JER Partners of McLean took Highland private in a $2 billion acquisition, but the portfolio’s performance plummeted during the recession.
In 2011, JER surrendered the properties to Dallas-based Ashford and Prudential Real Estate Investors, which converted the junior mezzanine debt they held to equity and pumped in $200 million of fresh capital. The restructuring valued the portfolio at $1.3 billion. Ashford bought out Pru’s 28.3% stake in 2015 in conjunction with the Credit Suisse debt package.