After Returning PPP Funds, Ashford Hospitality Trust Misses Nearly All Its Loan Payments

Embattled hotel REIT Ashford Hospitality Trust continues to struggle under the weight of the coronavirus crisis.

The DFW-based firm failed to make interest and principal payments on nearly all of its loans due at the start of April, according to an earnings report. 

Ashford said in its earnings report Wednesday that failing to make those payments constituted a default, and the hotel operator is now working directly with lenders on possible loan forbearances and agreeable workout solutions. 

Ashford Hospitality Trust and its affiliated brand, Braemer Hotels & Resorts, faced a month of intense scrutiny when parent company Ashford Inc. and its affiliates collectively received about $59M in loans from the Small Business Administration’s Paycheck Protection Program. 

PPP was designed by Congress to help firms cover payroll and other critical expenses during the coronavirus crisis.

Initial high-level guidance said the program was for companies with fewer than 500 employees and noted the loans would be capped at $10M. The program and some recipients received significant criticism when news reports showed larger corporations like Ashford received funds through numerous affiliates while small businesses struggled to gain entry into the program. 

When the federal government changed the terms of the program, Ashford returned all the money it collected through PPP. 

Ashford has suspended operations at 23 properties and has 93 other properties operating at reduced levels. The firm cut its planned capital expenditures by roughly $95M and suspended its common dividend payments, saving about $7M per quarter, according to the earnings report.

Even with limited operations and drastic cuts, Ashford says its hotel cash burn rate is roughly $20M per month. The firm ended the most recent quarter with $240M in cash and cash equivalents and $127M in restricted cash.