Coming off a solid fourth quarter, Ashford Hospitality Trust plans to continue selling properties and using some of the proceeds for activities it sees as more profitably attuned to the current state of the hotel and credit markets, such as mezzanine lending. During the Dallas-based REIT\u2019s conference call yesterday, president and CEO Monty J. Bennett noted that Ashford\u2019s enjoys a geographically diversified portfolio, a blend of full-service and limited service properties, an expanding mezzanine lending business, and \u201clocked-in, long-term fixed-rate debt, with less than 10 percent maturing over the next two years.\u201dDespite such strengths, investors have shied away from Ashford lately. Like most REIT stocks–and hospitality REIT stocks–Ashford share prices didn’t have a good year in 2007, droComing off a solid fourth quarter, Ashford Hospitality Trust plans to continue selling properties and using some of the proceeds for activities it sees as more profitably attuned to the current state of the hotel and credit markets, such as mezzanine lending. During the Dallas-based REIT\u2019s conference call yesterday, president and CEO Monty J. Bennett noted that Ashford\u2019s enjoys a geographically diversified portfolio, a blend of full-service and limited service properties, an expanding mezzanine lending business, and \u201clocked-in, long-term fixed-rate debt, with less than 10 percent maturing over the next two years.\u201d Despite such strengths, investors have shied away from Ashford lately. Like most REIT stocks — and hospitality REIT stocks — Ashford share prices didn’t have a good year in 2007, dropping about 42.1 percent for the year, compared with an average drop of 22.3 percent for hospitality REITs as a class, according to NAREIT REIT Watch. The company did, however, consistently pay dividends of 21 cents per share quarterly in 2007, and Bennett asserted that stocks in the sector are due for a bounce back. \u201cWe believe there\u2019s a serious mispricing occurring in the public equity markets,\u201d Bennett said. \u201cThe three primary RevPAR predictors in the industry are predicting 2008 RevPAR growth of 4.4 pecent, 5.1 percent and 4.6 percent, respectively. The market is pricing all hospitality REIT stocks, including our own, assuming sizable RevPAR declines in 2008.\u201d RevPAR, which is revenue per available room, is a key metric in the hospitality industry. Ashford\u2019s RevPAR rose 6 percent in 2007 compared with the previous year. \u201cAt some point, 2008\u2019s actual RevPAR performance will become apparent, and at that time, hospitality sector REIT investors will be rewarded,\u201d Bennett said. \u201cIt\u2019s clear that real estate sold off global last year, with investor concerns about real estate assets in general causing a good deal of that selling,\u201d David Loeb, senior analyst with Robert W. Baird & Co., told CPN this afternoon. \u201cSome REITs are doing share buybacks in the current environment, Ashford among them.\u201d To sustain the company\u2019s relatively high dividend payouts, Bennett said that the company plans to continue selling assets, with about $2 billion going on the market this year, with the goal of selling $600 million. Last year the company sold $312 million worth of hospitality properties, and thus far this year it has completed the sale of the JW Marriott New Orleans for $67.5 million in cash and assumed debt. \u201cIf the company achieves its goal of selling $600 million in assets, that would be between 15 percent and 20 percent of their current portfolio,\u201d noted Loeb. \u201cThat\u2019s substantial, but Ashford would still be predominantly an owner of hotels.\u201d Ashford also plans to increase its mezzanine loan activities. Toward that end last month, the REIT formed a joint venture with Prudential Real Estate Investors (PREI) to acquire or originate mezzanine loans for the hospitality sector. The JV, which will be funded over the next two years, will ultimately be capitalized with $300 million from investors in a fund managed by PREI and $100 million from Ashford. \u201cGoing forward, mezzanine investments will still be a relatively small part of Ashford\u2019s total investment portfolio, but if you look at the returns offered by them today, they\u2019re really quite high, and compare favorably to equity ownership,\u201d said Loeb. \u201cMezzanine investments are also less risky than the equity ownership, so it\u2019s a higher- return, lower-risk proposition for Ashford.\u201d<\/p>\n","protected":false},"excerpt":{"rendered":"
Coming off a solid fourth quarter, Ashford Hospitality Trust plans to continue selling properties and using some of the proceeds for activities it sees as more profitably attuned to the current state of the hotel and credit markets, such as mezzanine lending. During the Dallas-based REIT\u2019s conference call yesterday, president and CEO Monty J. Bennett…<\/p>\n","protected":false},"author":1314,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[21742],"tags":[],"class_list":["post-1003718037","post","type-post","status-publish","format-standard","hentry","category-latest"],"acf":[],"yoast_head":"\n