It is likely that most of you know that Ashford Hospitality (AHT) has announced it is likely they will be turning the keys to 19 hotels back to the lenders–they currently have 100 hotels in the portfolio. The news release is here.
Given the history of these folks you have to really wonder when/if the economy softens will these clowns hesitate even one minute to once again suspend their preferred dividends? You can be certain they will suspend them immediately if the cash flow starts to falter. The company has NO equity left on the balance sheet and debt up the wazoo.
You can already see that investors have no trust whatsoever in the company–the preferreds , which are now paying dividends, are trading down in the $14/$17 area. You can see them here.
The point here is simply DO NOT stretch for yield – there are plenty of respectable dividends out in other lodging REITs – the list is here.
not yet 😀
ASHFORD TRUST DECLARES PREFERRED DIVIDENDS
FOR THE THIRD QUARTER OF 2023
https://www.sec.gov/Archives/edgar/data/1232582/000123258223000066/aht2023q3preferreddividend.htm
I can think of numerous other adjectives than clowns for these guys. Read about Monty Bennett, the founder of AHT. He could have been the star of the old TV show Dallas instead of Larry Hagman. I would not invest in this company even with counterfeit money……..
“Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing predominantly in upper upscale, full-service hotels. ”
I travel to PHX frequently and stay near the airport regularly. The PHX airport Residence Inn might be full-service (it has a bar and serves food). However, it is certainly not upscale.
I would rate the Sheraton Inn in Ann Arbor MI (it’s old) as better but not upscale. The Plymouth and Detroit Metro Airport Sheraton hotels are both nicer. Typically when the Detroit Metro Airport hotel is nicer, yours is not upscale.
I vaguely recall La Concha in Key West (most Key West recollections are vague), but right now I see room rates at $198 a night. It’s a Crowne Plaza on Duvall St.
Fun? Certainly.
Upscale? Questionable at best.
This speaks to Collateral, but when you fail the 1st C then you move on.
Character Capital Credit
Collateral Covenants Cash
Based on the Tim’s post they flunk the first C – use of the word Clowns speaks to Character.
I recall looking at their 10K and reading something about a Series K preferred issue which seemed to be puttable at par. I didn’t put much thought into it beyond that. If a series with this feature does exist, however, it structurally makes Series K Sr to the other preferred issues. Not in terms of payment, but in terms of capital returns in the event that things get worse.
I am not interested enough to look into this, but if I were interested I would certainly did deeper into this topic.
Given the way Ashford is pre-announcing the key hand over I wouldn’t be surprised if they are trying to get a haircut on the loans. What lending institutions want to take possession of nineteen hotels and have to auction them off.
I have a few shares of RLJ-A (thanks Tim) and some common shares of APLE, for the most part I stay away from hotels, too cyclical for my taste and I just don’t understand the business enough to say what is good or bad. It seems room prices have almost doubled here in California, at least in the more desirable areas, not sure if that is what they need to get to stay afloat or price gouging, well see pretty soon I think.
returning underwater mortgages at the pool or property level does improve their equity and cashflow situation. whether or not that gets those to acceptable levels for investment, well, they’re risky sure which is why they yield 13% or whatever currently.
xerty–correct–all in all they should have improved financials–but remember theses are supposedly the ‘good times’ – if (if/when) we see a recession can they keep their heads above water?
I believe they have a lot more private preferred issuance now than public trading that is catered towards private investors. They may be prioritizing cash flow to keep paying on those since the private issuance may have some stronger clauses in them and will keep the distributions going. Haven’t paid attention much since I did a trade with them last year and took profits.