Dallas-based real estate investment trust (REIT) Ashford Hospitality Trust recently made the decision to hand over possession and control of 14 hotels to loan servicers. This came after the REIT had previously announced its intention to return the keys of 19 underperforming hotels back in July. By December, Ashford had successfully completed the transfer of five of those properties, located in various states such as Arizona, California, and Georgia.
Since July, Ashford has been working closely with the servicers to facilitate a consensual foreclosure or deed in lieu of foreclosure on these struggling properties. As a result of the transfer, the REIT no longer retains any economic interest in the operations of these hotels, signaling a significant shift in its real estate investment strategy.
The 14 hotels that were handed over are divided into two loan pools: a $180.7 million “Keys A” pool and a $174.4 million “Keys B” pool. Key properties in the “Keys A” pool include Courtyard Columbus Tipton Lakes in Indiana and Residence Inn San Jose Newark in California. Meanwhile, the “Keys B” pool comprises hotels such as Courtyard Newark Silicon Valley in California and SpringHill Suites BWI Airport in Maryland.
During its fourth-quarter earnings call, Ashford reported operating losses of $13.3 million for the quarter and $31.3 million for the year 2023. Despite these challenges, the company also announced the signing of a definitive agreement to sell the Hilton Boston Back Bay for $171 million to an undisclosed buyer. This sale reflects Ashford’s efforts to streamline its portfolio and focus on more financially viable assets.
The decision to hand over control of 14 underperforming hotels signals a significant shift in Ashford Hospitality Trust’s real estate investment strategy. By working closely with loan servicers and divesting properties with poor financial performance, the REIT is taking proactive steps to address its challenges and position itself for future growth and success in the competitive real estate market.