AHT - Ashford Hospitality Trust

[960v]

High End Hotel REIT Micro Cap with liquidity issues, but Oaktree just extended a loan to provide liquidity. 

 

https://www.ahtreit.com/

 

https://finance.yahoo.com/news/ashford-hospitality-trust-secures-commitment-130000402.html

 

I am going to start digging into this one.  Just curious to see if anyone had any experience with these guys?  High risk and volatility for sure but if things workout there appears to be potential for a nice return.

 

Their current portfolio looks promising if the vaccines take us back to near normal.      https://www.ahtreit.com/portfolio.htm

 

 

 

 

 

 

 

 

[BG2008]

Purely from a governance perspective, if Oaktree is involved, they are looking tor squeeze the minority.  Just speaking from experience.

[960v]

BG2008 - Indeed distressed financing at its finest  ;D

 

How would you say Oaktree is different than Berkshire when it comes to governance? 

 

Both seem to extract high interest loans and warrants with usually result in significant dilutions to common shareholders.

[BG2008]

BG2008 - Indeed distressed financing at its finest  ;D

 

How would you say Oaktree is different than Berkshire when it comes to governance? 

 

Both seem to extract high interest loans and warrants with usually result in significant dilutions to common shareholders.

 

Berkshire generally isn't looking to do a low ball take under.  I have heard they have, but it is generally not their intention with every deal.  If you look at the BoA deal, Buffet knows he's getting paid for his stellar reputation and the minorities get to participate.  Oaktree was involved in that leasing company a few years back.  They sold their interest without getting a similar deal for minority.  People routinely pile into Buffet companies like Store Capital, BoA etc.  There are good reasons for that. 

[960v]

Agree with you on Berkshire and their "reputation management;" I have done the sidecar with good results. 

 

Howard Marks seems to play a similar game with Oaktree, but I have heard some vulture snarls directed his way. 

 

Does Oaktree often do direct common equity take unders? or do they just kill the common holder when their issued notes go into default?

 

 

[Sullivcd]

What about prefs in a takeunder?

[BG2008]

What about prefs in a takeunder?

 

They can potentially strand the pref in a take under.  You can really get screwed that way.  Look at DTLA preferred.  Not saying it's going to happen, but pref are some of the worst paper sometimes.  You're not the debt with some claws and you are not the common which retains the upside. 

[960v]

What about prefs in a takeunder?

 

Plus the new Oaktree note is senior to the pref. 

 

https://www.prnewswire.com/news-releases/ashford-hospitality-trust-secures-commitment-for-200-million-corporate-financing-with-ability-to-upsize-to-350-million-301198531.html

 

Common could be of interest but you really have to sit down and figure out all of the dilutions that are about to happen.  Common Dilution of 20% is in the works.

 

https://www.sec.gov/Archives/edgar/data/1232582/000110465920138580/tm2037875-7_424b3.htm

[ValueMaven]

This is a great case study for BAM actually.  BAM HQ has a loan w/AHT which is in court. 

 

Ashford Hospitality Trust, a publicly traded hotel owner, committed a “fraudulent scheme” by moving money from hotels to the parent company in the second week of March, attorneys for Brookfield Asset Management Inc. wrote in a letter sent to Mr. Bennett and reviewed by The Wall Street Journal. Brookfield is a lender on properties owned by Ashford Hospitality Trust.

 

https://www.wsj.com/articles/dallas-hotel-owner-is-biggest-beneficiary-of-coronavirus-loan-program-11587568827

[960v]

ValueM - Interesting points.  BAM also owns Oaktree, so I guess they figured it out.  They must like the assets if they keep coming back?

 

Lots of drama going on here with a SEC investigation and the PPP loans.  It appears the SEC could wipe out AHT if hit it with fines and in turn this would also kill Oaktree senior notes?  From a quick look at the balance sheet there seems to be nothing Oaktree can secure a note against.  Seems odd that they would invest if they didn't expect the investigation to go away.

 

https://www.wsj.com/articles/texas-hotelier-monty-bennetts-companies-under-sec-investigation-11596507852

 

 

Delist notice also didn't help their cause.

 

https://www.wsj.com/articles/ashford-trust-receives-continued-listing-notice-from-the-nyse-due-to-non-compliance-and-intends-to-cure-01601583855?tesla=y

 

 

Entertaining Q3 presentation, definitely no sugar coating by AHT.

 

https://s1.q4cdn.com/906437698/files/doc_presentations/2020/09/v2/AHT-Preferred-Exchange-Offer-Presentation.pdf

[hasilp89]

Day job is hotel development/management. I only read the first post on whether to dig in. I’d Stay away with a 79.5 foot pole. I’ve looked at a number of the REITS and looked at ashFord this year when prices tumbled. While they have good assets management structure is heavily favored towards Monty. Fee structure is outrageous. I wouldn’t do the things they’re doing in a private deal. I haven’t done any digging on oaktree loan but my first thought was that oaktree will own these assets some day. They’re not investing due to management. Believe green haven had invested in them some while ago and sold due to governance you can find their letters online.

 

HST, PK and SHO are best in class full service hotel reits with better balance sheets.

HT has some leverage issues but it’s family run and they have been buying preferred and common.

 

I’m not invested in any of them currently although I traded the HT preferred this year.

[960v]

Day job is hotel development/management. I only read the first post on whether to dig in. I’d Stay away with a 79.5 foot pole. I’ve looked at a number of the REITS and looked at ashFord this year when prices tumbled. While they have good assets management structure is heavily favored towards Monty. Fee structure is outrageous. I wouldn’t do the things they’re doing in a private deal. I haven’t done any digging on oaktree loan but my first thought was that oaktree will own these assets some day. They’re not investing due to management. Believe green haven had invested in them some while ago and sold due to governance you can find their letters online.

 

HST, PK and SHO are best in class full service hotel reits with better balance sheets.

HT has some leverage issues but it’s family run and they have been buying preferred and common.

 

I’m not invested in any of them currently although I traded the HT preferred this year.

 

After, digging in I must concur with you on the Oaktree move.  Very hard to value this overall with all of the moving pieces.  This looks like a lottery ticket with ok odds at best, but its hard to put any serious weight in with all that's going on.  Thanks for the other REIT recommendations I'll take a look.

[kab60]

I'd say stay the fck away as well. Can hardly imagine a worse thing than being sandwiched between Monty and Marks. I once had a brief stint with Ashford Inc and invested with eyes wide open to Montys awful character, but even then he surprised to the downside. I sold when I figured it wasn't worth the return on headache. Really hope Marks screws him over, as someone else mentioned those management contracts are nuts. Not sure what'll happen to them in bankruptcy, but you can't even play the other side via Ashford Inc, since Monty stacked a ton of pref shares on top of common (gave hinself the prefs for some of his private businesses...). Common is close to worthless now, since prefs eat any eventuel cashflow.