Dallas Distress: The $410 Million Ashford Hospitality Loan in Special Servicing

Dallas Distress for Ashford Hospitality Trust

Dallas distress has hit hard as Monty Bennett’s Ashford Hospitality Trust faces yet another blow

The $410 million loan, backed by 17 hotels, was transferred to special servicing, marking its repeated troubles as it grapples with imminent monetary default.

Loan Background and Special Servicing

• The loan originated from Morgan Stanley Capital and was initially sent to special servicing in April 2020.
• It was modified in February 2021, with maturity originally set for November 2022.
• Despite a final 12-month extension, it now faces due repayment this November.

Performance and Investment Challenges

Performance metrics reveal significant issues: the net cash flow missed the underwritten figure by 14% last year.

• Despite rising occupancy rates from 67% in 2022 to 71%, concerns linger regarding asset performance.

Proxy Battle and Legal Challenges

Ashford’s recent distress is compounded by a heightened proxy battle threatening Monty Bennett’s position amidst accusations of self-dealing that undermined shareholder value.

Debt Management Strategy

Ashford is faced with the uphill challenge of managing significant debt burdens.

• Last summer, the firm opted to forgo $335 million in debt payments and announced returning 19 hotels to lenders.

In recent developments, Ashford’s lenders urged for a court-appointed receiver for seven distressed hotels.