DALLAS Ashford Hospitaly Trust is borrowing US$150 million through its US$250 million senior credit facility in a bid to take over the 29-property portfolio of Highland Hospitality.
Ashford, which disclosed the loan in a Securities and Exchange Commission filing last week, is thought to be seeking a restructuring of the mezzanine loan tranches associated with its Highland investments. Highland, a formerly publicly-traded REIT, is encumbered by US$1.3 billion in first-lien mortgage indebtedness or mezzanine indebtedness senior to the mezzanine loan tranches held by Ashford’s joint ventures.
Highland’s portfolio consists of 29 hotels with 8,667 guestrooms in 14 states and the District of Columbia.
Analyst David Loeb of R.W. Baird & Co. is bullish on Ashford’s possible Highland acquisition. “We believe a well-structured deal for the Highland portfolio could be a catalyst for the shares,” he writes in an investor note. “If Ashford strikes a deal for all or part of the Highland portfolio, we believe the news would be incrementally positive. The company has gone against its previously announced strategy of paying down the credit facility and not issuing equity, which leads us to believe an attractive opportunity is likely.”