Ashford Hospitality Trust (AHT) Comments on Liquidity Position; Suspends Dividend
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Ashford Hospitality Trust, Inc. (NYSE: AHT) provided an update on its strong liquidity position and announced a series of actions to manage the sources and uses of the Company's funds to conservatively navigate through challenging market conditions and enable opportunities that can create long-term shareholder value.
Ashford currently has approximately $200 million of unrestricted cash on hand, with $100 million conservatively invested in U.S. Treasuries. Recently these amounts were reduced by approximately $50M to partially pay down the Company's credit facility. The Company has approximately $29 million of hard debt maturities in 2009 for which it is already seeking a negotiated extension, and $75 million of hard debt maturities in 2010. These loans currently have better than 2.0x debt service coverage.
The Company has negotiated an amendment with the 11 banks in its $300 million credit facility. The main provision changes to the facility, which expires in 2012 after extensions, include:
-- Reducing the fixed charge coverage ratio to 1.25x effective immediately
until March 31, 2011, at which time the ratio steps up to 1.35x.
-- Reducing the revolver commitment level from $300 million to $250
million.
-- Reducing the maximum leverage ratio from 75% to 65%.
-- Adjusting the grid pricing upward to a spread of 275 basis points to 350
basis points.
-- Suspending the dividend to the minimum REIT requirements through 2009.
Effective with the fourth quarter ending December 31, 2008, and in conjunction with the Credit Facility Amendment outlined above, the Board of Directors suspended the Company's common stock dividend. The Company expects to distribute the minimum dividend required to maintain its REIT status in 2009, which is likely to be assessed, if necessary, in the fourth quarter of 2009.
With the removal of the common dividend, the Company will pay the base rate for the Company's Series B Convertible Preferred Stock at $0.14 per share for the fourth quarter ending December 31, 2008.
Ashford Hospitality Trust, Inc. is a self-advised real estate investment trust (REIT).[SM]
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