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Ashford Hospitality Trust defaults on loans linked to 9 hotels

Ashford Hospitality Trust Inc. failed to repay $144.2 million in mortgage and mezzanine loans on an eight-hotel portfolio when they matured July 9, and the portfolio's senior mezzanine lender said it plans to sell the subsidiaries that own the properties in a public auction.

Separately, the company received notice that it was in default on another loan linked to a Minnesota hotel after missing four payments. The mezzanine lender on the property plans to sell ownership interest in entities that own the property, the W Hotel in Minneapolis, at a public sale Aug. 6.

U.S. hotel performance cratered in the early months of the COVID-19 pandemic, and Ashford Hospitality Trust suspended its dividend and cut staffing in response to the crisis. The real estate investment trust and its external manager, Ashford Inc., were among the top publicly traded recipients of loans from the Small Business Administration's Paycheck Protection Pram before vowing to return the money following a public backlash.

The $144.2 million loan is secured by the "Rockbridge Portfolio," which consists of the Courtyard Billerica, Hampton Inn Columbus Easton, Hampton Inn Phoenix Airport, Homewood Suites Pittsburgh Southpointe, Hampton Inn Pittsburgh Waterfront, Hampton Inn Pittsburgh Washington, Residence Inn Stillwater and Courtyard Wichita. The senior mezzanine loan on the portfolio has an outstanding principal balance of $16.5 million.

The loan for the Minneapolis property was originated in November 2015 for $6.5 million, and Ashford defaulted by missed payments in April, May, June and July. The loan is secured by the limited liability company membership interests in Ashford Foshay GP LLC, and Ashford TRS Foshay LLC and the limited partnership interest in Ashford Foshay LP, the hotel's owner. All three are Ashford Hospitality Trust subsidiaries, and the lender intends to sell the ownership interests in all three.

The company said July 21 that it entered into standstill agreements with the lenders on a different portfolio secured by 19 hotels. In total, the company said at the time that it had entered into agreements conditionally waiving or defer defaults for loans with an aggregate outstanding principal balance of roughly $1 billion, out of roughly $4.1 billion in property-level debt outstanding as of March 31.