Companies affiliated with Dallas-based hotelier Monty Bennett are set to receive $46 million in loans from the federal government’s Paycheck Protection Program, despite paying out millions of dollars in preferred dividends.
Subsidiaries of Ashford Hospitality Trust, a real estate investment trust, have received $30 million in loans from the federal stimulus package through the Small Business Administration and expect to receive more, according to the Wall Street Journal. The total is the largest loan amount received out of more than 100 public companies the Journal reviewed.
Parent company Ashford Inc. and its subsidiaries have laid off or furloughed nearly all of its 7,000 employees, the report noted. The federal government’s PPP fund provides loans up to $10 million to cover rent, mortgage interest, utilities and payroll.
It was designed to allow struggling companies to pay employees out of work because of the coronavirus pandemic. The $349 billion program ran out of money after just 13 days but lawmakers struck a deal Tuesday to provide more than $310 billion in new funding.
Ashford Hospitality has also stopped payments on much of its $4 billion in debt, but still paid Bennett and his father $2 million in preferred dividends.
Braemar Hotels & Resorts Inc., a company advised by Ashford Inc. that Bennett also chairs, received nearly $16 million in loans from the federal program.
The Marriott Beverly Hills and Ritz Carlton in Atlanta are among the more than 100 hotel properties Bennett’s company owns.
The hotel industry has lobbied the federal government to carve out more funding to help owners avoid foreclosure amid a decimated industry. Nationwide, hotel occupancy stood at 23.4 percent, according to the latest figures from hotel research firm STR.
Bennett said that 75 percent or more of the money Ashford Hospitality Trust received will “be used to bring our employees back to work,” and the rest used to “pay utilities, rent, and debt service to lenders,” the Journal reported. That 75 percent is required by federal law.
Brookfield Asset Management, one of Ashford Hospitality’s lenders, accused the company of committing a “fraudulent scheme” by moving money between entities in March. Bennett said Brookfield is trying to pressure the company into accepting unfavorable loan terms. [WSJ] — Dennis Lynch