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Officials of Hodges Ward Elliott, Inc. (HWE), the nation’s premier hotel brokerage and investment banking firm, today announced that it represented Ashford Hospitality Trust, Inc., in the placement of $145 million in non-recourse financing on five of the REIT’s hotels. The six-year financing includes a first mortgage from Prudential and a mezzanine loan from Wheelock Street LLC.
The five hotels, aggregating 1,460 rooms, include four Embassy Suites and one Hilton Hotel, are strategically located in four states: Embassy Suites Santa Clara, Silicon Valley, Calif.; Embassy Suites Crystal City, National Airport, Va.; Embassy Suites Orlando Airport, Fla., Embassy Suites, Portland Downtown, Ore., and Hilton Orange County, Costa Mesa, Calif. Two additional properties that were included in the maturing loans, the Hilton Rye Town, Rye Brook, N.Y. and Hilton Suites, Auburn Hills, Mich., are now unencumbered.
“Even though the credit markets remain quite constrained due to liquidity and price impairments, there is capital available to finance large, sophisticated transactions such as this,” said Mark Elliott, principal of Hodges Ward Elliott. “Our brokerage expertise allowed us to credibly establish the highest values in the underwriting process, thus maximizing proceeds for our client. We utilized our strong financial relationships and market knowledge to create a capital structure that provided the lenders with an appropriate risk/reward. We presented the borrower with a number of investment solution alternatives and then structured the recapitalization. By bringing these financial needs to the market, we were able to negotiate and finalize terms as dictated by the marketplace.
“We believe this transaction will be a bellwether that sets in motion a greater interest in lending and recapitalization of major transactions by institutional investors, which we believe is an early indicator of a stabilizing market,” Elliott noted. “With forecasts from hotel industry consultants predicting a recovery in the second half of 2010, confidence is beginning to return to the marketplace.”
Ashford used the proceeds to pay off a $75.0 million loan that matures next year and a $65.2 million loan maturing in 2011 that were secured by the five properties. In addition, the new loan provides $4.0 million for capital improvements at the hotels to be implemented over the next two years.
“We are seeing greater interest and activity in both financing and hotel real estate transactions than at any time in the past 18 months,” Elliott said. “We expect to see the number and size of hotel transactions and financings increase substantially in 2010.”
About Hodges Ward Elliott
Founded in 1975, HWE is the world’s leading hotel brokerage and investment firm and consistently has been ranked a leader in hotel transactions with greater than 30% market share over the past three years, according to independent outside sources. Since 1990, HWE has structured the sale of more than 1,100 hotels, totaling nearly 225,000 rooms. Hodges Ward Elliott is world renown for representing leading asset and real estate investment opportunities spanning all hotel categories and markets.
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