Ashford Hospitality tumbles on loan portfolio woes (AP)
Tue, 16 Jun 2009 17:57:58 Etc/GM
Robert W. Baird analyst David Loeb downgraded the Dallas-based company's stock to an "underperform" rating from "neutral." The shares dropped 77 cents, or 20 percent, to $3.08 in afternoon trading. The stock has traded between 86 cents and $5.75 during the past 52 weeks.
Loeb said Extended Stay's bankruptcy filing on Monday will likely lead to a total loss of Ashford's investment in Extended Stay's mezzanine debt.
Ashford representatives were not immediately available for comment Tuesday.
Spartanburg, S.C.-based Extended Stay owns more than 680 hotels in the U.S. and Canada catering to long-term business travelers under brands including Extended Stay Deluxe, Extended Stay America Efficiency Studios and Homestead Studio Suites.
The company was acquired in June 2007 by David Lichtenstein's real estate investment company, Lightstone Group, in a highly levered deal financed by about $7.4 billion in loans. That acquisition took place near the height of the hotel market, prior to the credit crunch and a sharp downturn in hotel occupancies.
Loeb said he expects Ashford's note to be fully written off and predicted additional problems with the company's loan portfolio.
"(Ashford) provided loans to a broad cross section of highly levered owners and properties which are today experiencing greater problems resulting from weak travel trends; some are already distressed, while others could soon be," Loeb said.
The analyst said he estimates Ashford's remaining mezzanine loan portfolio is now worth just 25 percent of book value.
source: http://biz.yahoo.com/ap/090616/us_ashford_hospitality_mover.html?.v=1