Lodging companies connected to Texas hotelier Monty Bennett are returning more than $68 million in federal aid, after facing pressure for receiving the funds in the first place.
One of the companies linked to Bennett, Braemar Hotels & Resorts, had reached a deal to sell a property in Florida to Starwood Capital Group for $120 million, but the company called off the deal after learning it would receive funding from the federal government’s Paycheck Protection Program, according to the Wall Street Journal.
Braemar, Ashford Inc. and Ashford Hospitality Trust all said in a statement on May 2 that they would pay back the loans because of “the agency’s recently changed rules and inconsistent federal guidance that put the companies at compliance risk.” Ashford Hospitality Trust alone received $38 million from the program, more than any other public company had disclosed, based on securities filings.
The Treasury Department said in April that companies with access to funds or capital markets should repay their loans by May 7 or face the possibility of criminal charges.
Bennett’s companies released an earlier statement saying they would keep the PPP money because “no other programs exist to help larger hotel ownership companies survive the crisis and bring their employees back to work.”
Braemar had a handshake agreement to sell its Pier House resort in Florida to Starwood for about $120 million, but Bennett changed his mind after learning that the firms’ applications for PPP funding was going to be accepted. This likely would have further increased pressure on the companies to return their PPP money, some specialists told the Journal.
“He had access to credit by selling the business,” former Treasury official Richard Prisinzano said, “so he should have used that avenue first.” [WSJ] — Eddie Small