A Dallas real estate investment trust controlled by Texas real estate mogul Monty Bennett dubbed will surrender four Bay Area hotels to lenders.
Ashford Hospitality Trust, overseen by a group led by Bennett, said the hotels in Newark, Oakland and Walnut Creek were among 19 across the nation it plans to return to commercial-mortgage-backed securities lenders, the San Francisco Business Times reported.
The trust said the properties failed to meet debt yield tests or draw offers for more than their debt, according to a news release.
The move is the latest sign in what experts say is a growing number of CMBS loan obligations in the Bay Area due in the next 18 months that could force owner-borrowers’ hands in a capital market that makes refinancing tough. The owner of two major hotels in San Francisco just surrendered the properties after stopping payment on a $725 million loan.
Now in the East Bay, the Ashford trust aims to toss the keys of four hotels to lenders behind loans tied to the properties.
In Newark, the portfolio includes the 168-room Residence Inn by Marriott Newark Silicon Valley at 35466 Dumbarton Court, and the 181-room Courtyard by Marriott Newark Silicon Valley at 34905 Newark Boulevard.
In Oakland, it includes the 156-room Courtyard by Marriott Oakland Airport at 350 Hegenberger Road.
And in Walnut Creek, it includes the 249-room Embassy Suites by Hilton Walnut Creek at 1345 Treat Boulevard.
The Ashford Hospitality Trust said the hotels it’s giving to lenders would have required capital expenditures averaging more than 18 percent of annual revenues through 2025, compared with the industry standard benchmark of between 4 and 5 percent.
“For the most part, the (hotels) are located in markets that have experienced significant headwinds throughout their post-pandemic recoveries, and a number of these markets are not forecasted to reach pre-pandemic top-line levels until 2025 or 2026,” the company said.
Ashford Trust owns 34 hotels secured by six CMBS loans, none of which passed required debt yield tests, the company said. Under terms of the loans, Ashford could opt to extend the loans by making additional payments.
The company decided to extend the loans related to 15 of those hotels for a combined cost of $129 million, while handing the rest of the hotels to lenders that include Bank of America, Barclays Bank and Morgan Stanley.
The REIT will retain possession of the full-service, 357-room Fremont Marriott Silicon Valley, located at 46100 Landing Parkway, via a $41 million loan extension. Ashford Trust acquired the property in 2014 for $50 million, according to the Business Times.
The Ashford group, a set of private and public firms and REITs controlled by Bennett, oversees nearly $4 billion in assets, including the Beverly Hills Marriott and the Ritz Carlton in Atlanta. Bennett, recently profiled by The Real Deal, was described by the Dallas Morning News as the “face of corporate greed” related to his firm’s receipt of Covid-era PPP funding grants. His firms collectively became the largest recipient of the government relief measures. After public pressure, he returned the money.
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