Ashford Secures Loan For Up To $350M From Oaktree; Shares Pop 25%

Shares of Ashford Hospitality Trust closed 25% higher on Monday and are up by about 3.4% in today’s pre-market trading after the company received a $200 million senior secured term loan from Oaktree Capital Management. Further, the real estate company said that the corporate financing commitment could increase by $150 million to an aggregate $350 million.

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Ashford (AHT) said that the financing is “expected to close in the coming weeks.” Ashford’s CEO J. Robison Hays said, “We’re encouraged by the news regarding vaccines and believe this strategic financing commitment provides substantial capital and ample liquidity for Ashford Trust to capitalize on the upcoming recovery in the hospitality industry.”

Hays added, “Oaktree is a best-in-class institutional partner and we welcome the opportunity to work with them on our shared vision for the Company. We believe that our portfolio is not only well-positioned as we come out of this pandemic, but Ashford Trust now has a sound balance sheet and sufficient capital resources to successfully navigate the pandemic and pursue long-term growth.” (See AHT stock analysis on TipRanks).

Earlier on Dec. 2, B. Riley Securities analyst Bryan Maher lowered the stock’s price target to $2.50 (15.5% downside potential) from $3.50 and maintained a Hold rating.

The analyst said that lodging REIT shares “may have gotten a little ahead of themselves.” He noted that the recent surge in lodging REIT is driven by the positive COVID-19 vaccine news. However, the analyst also believes that there still remains “significant uncertainty” related to the recovery in business travel.

Meanwhile, the Street has a cautiously optimistic outlook on the stock with a Moderate Buy analyst consensus. The average price target of $4.25 implies upside potential of about 43.6% to current levels. Ashford stock has lost 89.4% in value so far this year.