Beleaguered Hotel REIT Once Again In Hot Water After Lenders Sue To Regain Control Of Properties
A Dallas-based real estate investment trust saddled with $150M worth of loan defaults is being sued by lenders in a bid to seize the company’s distressed hotels.
Two of the hotels, the 152-room Courtyard Dallas Plano and the 126-room Residence Inn Dallas Plano/Legacy, are in DFW, according to The Real Deal. The remaining hotels are in California, Maryland and New Jersey.
Ashford defaulted on the loans in July.
Ashford was founded by Monty Bennett, an eccentric real estate mogul who once built a cemetery and placed endangered animals on his East Texas ranch to stop the local water district from running a pipeline through the land.
Bennett, who serves as chairman of the board at Ashford, is also the publisher of online news outlet The Dallas Express.
Earlier this year, Bennett said he would transfer 19 distressed Bay Area hotels that were part of a $982M mortgage pool back to lenders rather than pay $255M to extend their loans. Another three loans backing 15 hotels were extended through a paydown of $129M.
Ashford has been dealing with debt woes for years. In August 2020, it sold its first New York City hotel after less than two years of ownership to meet demands from lenders.
Pandemic-era losses put the company on the brink of bankruptcy and ultimately forced Ashford to borrow $200M from Oaktree Capital Management in January 2021, CoStar reported. The company has since been selling assets to pay down debt, including 79 units at WorldQuest Resort in Orlando for nearly $15M in August.
Ashford also came under scrutiny earlier in the pandemic for its extensive use of the Paycheck Protection Program. The company was the single largest beneficiary of the program, and it returned $59M in PPP loans in May 2020 after weeks of criticism and threats of a congressional investigation.