Oaktree Capital Management provided a $200 million senior secured term loan to Ashford Hospitality Trust. The term loan can be upsized by $150 million to an aggregate amount of $350 million.
The loan has a three-year term with two one-year extension options subject to certain fees and tests. The loan also allows Ashford Hospitality Trust the option to accrue (and not pay in cash) the interest expense for up to two years, and Oaktree will be eligible to receive an exit fee that may be paid by Ashford Hospitality Trust in either cash or warrants.
Ashford Hospitality Trust intends to use the net proceeds from this corporate financing to strengthen its balance sheet, increase liquidity and for general corporate purposes.
“We’re encouraged by the news regarding vaccines and believe this strategic financing commitment provides substantial capital and ample liquidity for Ashford Trust to capitalize on the upcoming recovery in the hospitality industry,” J. Robison Hays, president and CEO of Ashford Hospitality Trust, said. “We’ve had great success in our forbearance efforts and we continue to take aggressive measures to optimize our properties as well as enhance our operational and financial flexibility.
“Oaktree is a best-in-class institutional partner and we welcome the opportunity to work with them on our shared vision for the company. We believe that our portfolio is not only well-positioned as we come out of this pandemic, but Ashford Trust now has a sound balance sheet and sufficient capital resources to successfully navigate the pandemic and pursue long-term growth.”
RBC Capital Markets served as Ashford Hospitality Trust’s financial advisor on the transaction, and Weil, Gotshal & Manges and Cadwalader, Wickersham & Taft served as legal counsel.
Ashford Hospitality Trust is a real estate investment trust (REIT).