Real Estate

Ashford's $150M Loan Default Leads to DFW Hotel Foreclosures

Ashford Hospitality Trust faces foreclosure on two Plano hotels, amidst financial struggles and a $194 million net loss in 2023.

By Doug Elli

4/3, 14:03 EDT

Key Takeaway

  • Two of Monty Bennett’s Ashford Hospitality Trust properties in Plano face foreclosure, with a scheduled sale on April 2.
  • The properties, valued at $9.5 million and $7.4 million, defaulted on $150 million in loans last summer.
  • Amidst financial struggles, Ashford delists its stock after a net loss of $194 million in 2023; shares traded at $1.30 as of April 3.

A Turbulent Time for Ashford Hospitality Trust

In a dramatic turn of events, Ashford Hospitality Trust, a Dallas-based firm led by Monty Bennett, has announced the delisting of its stock in an effort to conserve funds amidst financial turmoil. This decision came closely on the heels of a foreclosure sale announcement for two of its distressed properties in Plano, Texas. The properties in question, a 152-key Courtyard Dallas Plano in Legacy Park and a 126-key Residence Inn Dallas Plano/Legacy, were set for auction at the Collin County Courthouse. This move underscores a series of challenges faced by the trust, including a lawsuit from lenders seeking control over seven distressed hotels and a significant default on $150 million in loans last summer.

Foreclosure and Financial Strain

The foreclosure of the two Plano properties, valued at $9.5 million and $7.4 million respectively, is a stark indicator of the financial distress Ashford Hospitality Trust is experiencing. Acquired in 2007, these properties were part of a larger portfolio that failed to meet debt yield tests, leading to a default on substantial loan obligations. The decision to return 19 hotels to lenders, while extending mortgages for another 15 by paying $129 million, reflects a strategic but desperate attempt to stabilize the trust's financial standing. This situation is further complicated by the potential termination of franchise agreements with Marriott, which could devalue the properties significantly.

The Plano Paradox

Despite the financial woes of Ashford Hospitality Trust, the city of Plano remains a vibrant and growing suburb of Dallas-Fort Worth, attracting numerous corporate relocations and expansions. Companies such as Tapcheck, QuickFee, Fisher Investments, SK Signet America, and Westwood Professional Services have recently announced plans to establish a presence in Plano. The city is already home to major corporations like Toyota North America, FedEx, and JPMorgan Chase & Co., making the foreclosure of Ashford's properties there all the more paradoxical given the booming local economy.

The Bigger Picture

Ashford Hospitality Trust's decision to delist its stock and the foreclosure of its Plano properties are symptomatic of broader challenges within the hospitality sector, particularly for firms struggling to recover post-pandemic. The trust's net loss of $194 million in 2023, alongside a modest increase in revenue per available room, highlights the precarious balance between recovery efforts and ongoing financial obligations. This scenario raises questions about the sustainability of high-leverage business models in the current economic climate, especially in markets that are not expected to reach pre-pandemic levels until 2025 or 2026.