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Ashford Scripts $2B Sale Plan for Mezz Strategy

DALLAS-The REIT is selling select-service portfolios and one-off full-service hotels outright or in JVs to mine capital for increased investment in the mezz arena.

By Connie Gore | Updated on February 28, 2008

DALLAS-Ashford Hospitality Trust Inc., placing a bet on the mezzanine market, will put $2 billion of assets up for sale to fuel its lending plan. The Dallas-based REIT’s leaders say not all will be left go, but they expect to shed at least $600 million of hotels outright or in joint ventures by year’s end.

“The decision will be based primarily on the offers received versus what we think the values are,” Monty J. Bennett, Ashford’s president and CEO, told shareholders and analysts during yesterday’s earnings call. A handful of hospitality brokers have been tapped to market the assets. The hotels haven’t been publicly identified as yet, but he describes it as a mix of select-service portfolios and one-off full-service properties, predominately encumbered by management contracts and assumable debt.

Bennett says Ashford’s mezzanine platform will dominate the REIT’s strategy for the next few years. And, it will be an asset seller rather than a buyer. The plan is being funded through hotel sales and a $400-million joint venture with Parsippany, NJ-based Prudential Real Estate Investors, which has a first right of refusal for all mezz loans.

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