SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
Date of Report (date of earliest event reported): March 10, 2011
ASHFORD HOSPITALITY TRUST, INC.
(Exact name of registrant as specified in its charter)
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| MARYLAND
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001-31775
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86-1062192 |
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(Commission File Number)
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(I.R.S. Employer Identification Number) |
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| 14185 Dallas Parkway, Suite 1100 |
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| Dallas, Texas
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75254 |
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(Zip code) |
Registrant’s telephone number, including area code: (972) 490-9600
Check the appropriate box if the Form 8-K filing is intended to simultaneously satisfy the filing
obligation of the registrant under any of the following provisions:
o Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
o Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
o Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On March 10, 2011, Ashford Hospitality Trust, Inc. (the “Company”) formed a new joint
venture with Prudential Real Estate Investors (“PREI”) to take ownership of a 28-property
hotel portfolio (the “Highland Hospitality Portfolio”) through a debt restructuring and
consensual foreclosure. Total consideration for the Highland Hospitality Portfolio was
approximately $1.277 billion.
The Company and PREI formed a new joint venture, PIM Highland Holding LLC (the “New Joint
Venture”), pursuant to a Limited Liability Company Agreement (the “New JV Agreement”),
dated March 10, 2011, by and between PRISA III Investments, LLC, an affiliate of PREI, and Ashford
Hospitality Limited Partnership (“AHLP”), a subsidiary of the Company. In accordance with
the terms of the New JV Agreement, the Company, through AHLP, will own 71.74% of the New Joint
Venture. In connection with its formation, the New Joint Venture effectuated a consensual
foreclosure and restructuring of certain mezzanine loans and senior loans on the Highland
Hospitality Portfolio. As a result of this restructuring, the New Joint Venture owns, directly or
indirectly, each of the Highland Hospitality Portfolio hotels.
The Highland Hospitality Portfolio acquired by the New Joint Venture consists of 17
full-service, upper-upscale and luxury hotels, which comprise 5,684 rooms and feature brands such
as Ritz-Carlton, Marriott, Hilton, Hyatt, Renaissance, Sheraton and Westin. The remaining 11
hotels have 2,400 rooms and include brands such as Crowne Plaza, Hilton Garden Inn, Courtyard,
Residence Inn and Hampton Inn.
The Company will operate the hotels under management agreements with Remington Lodging,
Marriott, Hyatt, McKibbon, and Hilton.
At closing, AHLP invested $150 million and PRISA III invested $50 million to reduce debt and
to fund projected capital expenditures. AHLP funded its contribution from available cash. AHLP
will own 71.74% of the New Joint Venture and PRISA III will own 28.26%, partially reflecting previous
investments made by both parties. At closing, a $32 million reserve was set aside to be used for
owner funded capital expenditures.
The
New Joint Venture worked out a consensual restructuring with the existing senior lenders. The
existing senior lenders will provide $530 million of first mortgage three-year financing with two
one-year extension options on 25 of the hotels and the New Joint Venture assumed first mortgage
financing of $146 million on three of the hotels with approximately two years remaining until
maturity. Additionally, certain lenders will provide $419 million of mezzanine financing that will
cover all 28 hotels. The structure provides for fixed and floating rates with LIBOR floors and
spreads for various tranches with an anticipated first year interest rate of 5.25% based upon the
current forward LIBOR curve.
Additionally, Ashford Hospitality Finance, LP (“AHF”) entered into a Consent and
Settlement Agreement (the “Settlement Agreement”) with Wells Fargo Bank, N.A.
(“Wells”), as successor by merger to Wachovia Bank, National Association, on March 10, 2011
to resolve potential disputes and claims between AHF and Wells relating to AHF’s purchase of a
participation interest in certain mezzanine loans. Wells denied the allegations in AHF’s complaint
and further denies any liability for the claims asserted by AHF; however, the Settlement Agreement
was entered into to resolve AHF’s claims against Wells and to secure Wells’ consent to AHF’s
participation in the Highland Hospitality Portfolio restructuring. Pursuant to the Settlement
Agreement, Wells has agreed to pay $30 million to AHF in varying payments over the next five years,
or earlier if certain conditions are satisfied. As part of the Settlement Agreement, AHF and Wells
have agreed to a mutual release of claims.
The foregoing summary is qualified in its entirety by reference to the New JV Agreement, the
loan agreements and the Settlement Agreement each of which will be filed as an exhibit to the
Company’s Quarterly Report on Form 10-Q for the period ending March 31, 2011.
Item 2.01. Acquisition or Disposition of Assets.
The information contained in Item 1.01 is incorporated herein by reference.