Ashford Hospitality Trust Inc. (AHT), the second largest lodging real estate investment trust (REIT) in the U.S., has recently announced its decision to issue 6.0 million common shares to raise cash and repay its debt. The company will also grant the underwriters an option to purchase an additional 0.9 million shares to cover any over-allotments.
Morgan Stanley (MS) – a global financial services firm; KeyBanc Capital Markets – the investment banking division of KeyCorp (KEY); UBS Securities LLC, a subsidiary of UBS AG (UBS); and Credit Suisse Securities (USA) LLC – the investment banking division of Credit Suisse Group (CS) are acting as joint book-running managers for the public offering.
Ashford intends to utilize the proceeds from the secondary offering to repay debt under its senior credit facility and for other corporate purposes such as acquisition and other hotel-related investments. By the end of first quarter 2011, the company had a staggering debt burden of approximately $1.1 billion, primarily due to its acquisition binge.
Ashford has continually focused on acquiring upper-upscale and luxury hotels in diversified markets throughout the U.S. The acquisition spree is part of the long-term strategy of the company to own assets in some of the premium markets of the country at discounted prices as property prices has nose-dived in the last couple of years.
Ashford also has a well-experienced management team that puts on board a unique perspective to hotel investment sourcing, underwriting, asset managing, selling, and financing. The company’s proactive asset management strategy further provides the flexibility to adapt to the changing market conditions to maximize operating margins and enhance the customer experience.
We currently have a ‘Neutral’ rating on Ashford, which presently has a Zacks #3 Rank translating into a short-term ‘Hold’ recommendation.
