What are the refinancing details for Ashford Hospitality Trust’s Renaissance Nashville Hotel?
Ashford Hospitality Trust, Inc. (NYSE: AHT) has completed a refinancing of the mortgage loan secured by the Renaissance Nashville Hotel, a 673-room upper upscale property located in downtown Nashville, Tennessee. The deal replaces a prior mortgage of $267.2 million with a new non-recourse loan of $218.1 million, significantly reducing the company’s interest expense and providing flexibility in a challenging capital markets environment.
The new loan carries an initial two-year term, with three one-year extension options, offering a maximum maturity in September 2030. Importantly, the debt is structured as interest only, which gives the real estate investment trust (REIT) more breathing room to focus on operations and cash flow generation. The interest spread was cut from SOFR plus 3.98% on the old debt to SOFR plus 2.26% on the new loan, a reduction that translates into millions in potential annual savings.
Alongside the refinancing, Ashford increased the preferred equity associated with the hotel by $53 million, but simultaneously negotiated a reduction in the rate of return from 14% to 11.14%. That move lowers the weighted cost of capital even as the REIT uses preferred equity to balance its financing stack.
Why did Ashford Hospitality Trust pursue refinancing at this stage?
The refinancing reflects both opportunity and necessity. For Ashford Hospitality Trust, the past few years have been dominated by debt management challenges. Like many hotel REITs, the company faced higher interest costs following the rapid tightening cycle of the Federal Reserve, which sent SOFR and other benchmark rates to multi-year highs. Servicing floating-rate loans became a heavy burden, with some hospitality REITs forced to negotiate extensions under less-than-favorable terms.
By locking in this new loan at a lower spread, Ashford not only reduces its debt costs but also sends a signal to the market that lenders are regaining confidence in high-performing hospitality assets. The non-recourse nature of the financing also limits potential downside risk for Ashford if market conditions turn, since lenders’ claims are restricted to the hotel itself.
The decision also reflects a broader trend in the REIT sector. After a period of capital scarcity, lenders are opening up to refinance deals where property performance justifies confidence. The Renaissance Nashville Hotel, with its robust occupancy levels and revenue metrics, clearly provided the necessary foundation for the transaction.
How has the Renaissance Nashville Hotel been performing financially and operationally?
The Renaissance Nashville Hotel has consistently outperformed its competitive set in Nashville. In the first half of 2025, the property achieved a group occupancy rate of approximately 52.5%, nearly double the 29.8% average occupancy across peer hotels in its competitive set. Revenue per available room (RevPAR) rose to $222 for the year ending June 2025, which represents a 5.5% increase compared to 2019 pre-pandemic levels.
This performance has been underpinned by sustained demand from convention and business travelers, given the property’s location adjacent to the Music City Center and near major attractions such as Bridgestone Arena and Broadway. The hotel has also benefited from capital investment. Since 2014, Ashford has spent more than $58 million on improvements, including fitness center relocation, pool upgrades, and enhancements to meeting spaces. In 2024 alone, these upgrades helped elevate the property’s appeal, allowing it to attract premium group business that bolsters higher-margin revenues.
The property’s appraisal value also increased modestly in 2025, from $407 million in May 2024 to $413 million in July 2025, demonstrating the market’s recognition of its improving fundamentals. For lenders, this rising valuation provided further justification for extending favorable refinancing terms.
What impact does the refinancing have on Ashford Hospitality Trust’s balance sheet and stock performance?
From a financial perspective, this refinancing improves Ashford Hospitality Trust’s liquidity profile and lowers interest expense. The reduction in spread from 3.98% to 2.26% against SOFR creates material savings in debt service costs, while the shift to interest-only payments enhances near-term cash flow flexibility. This is particularly important for a company that has reported negative net income in recent periods and continues to grapple with high leverage.
As of the trailing twelve months, Ashford reported revenue of around $1.13 billion but recorded a net loss of approximately $261 million. Its debt-to-equity ratio remains among the highest in the hotel REIT peer group, underlining the importance of each incremental step in reducing financing costs. Investors have been cautious, and the company’s share price has reflected that caution, with year-to-date declines of more than 15%.
The refinancing announcement has offered a modestly positive sentiment shift, with analysts noting the strategic importance of reducing debt service costs and extending maturities. However, consensus ratings on the stock remain mixed, leaning toward “Hold.” Institutional investor flows suggest caution, with both domestic and foreign institutions waiting to see whether Ashford can replicate similar refinancing successes across its broader portfolio.
How does this refinancing tie into broader hotel REIT and capital markets trends?
The refinancing of the Renaissance Nashville Hotel highlights a turning point in hotel REIT financing. Following years of disruption due to the pandemic and rising rates, the ability to refinance at more favorable terms reflects lenders’ renewed confidence in the sector’s fundamentals. For upscale, urban, and convention-oriented hotels, capital market conditions appear to be stabilizing.
Hotel REITs have had to prioritize balance sheet repair since 2020. While leisure demand rebounded quickly, group and corporate travel lagged, creating uneven recovery profiles. Now, with group occupancy recovering strongly in markets like Nashville, properties with resilient performance metrics are finding traction with lenders. Ashford’s deal mirrors this shift and underscores the broader availability of refinancing options for well-located, high-performing assets.
This transaction also illustrates the growing role of preferred equity as a tool to balance financing. By raising $53 million in additional preferred equity while reducing its cost, Ashford demonstrates a willingness to adjust its capital stack to optimize overall expenses. Many hotel REITs have similarly turned to preferred equity and joint ventures to reduce leverage while preserving ownership stakes in prized properties.
What risks and challenges remain for Ashford and its investors?
Despite the refinancing win, Ashford remains exposed to several risks. First, the new loan is still floating rate, tied to SOFR. While the spread is narrower, the company’s borrowing costs could rise if SOFR increases over the coming years. Although an interest rate cap is in place during the initial loan term, the extension periods may introduce exposure to higher rates.
Second, the increase in preferred equity, while lowering its coupon rate, adds another layer of fixed claims on cash flow that outrank common equity. If operational performance weakens, particularly in the face of macroeconomic headwinds such as inflation in wages or utilities, Ashford may find itself under renewed pressure to service its obligations.
Third, Ashford’s broader portfolio still contains properties that may not be performing at the same level as the Renaissance Nashville. Investors will want to see whether this refinancing serves as a blueprint for broader portfolio improvements or whether it represents a one-off success tied to a marquee asset.
What should investors watch for in Ashford Hospitality Trust’s next moves?
Investors should pay close attention to Ashford’s strategy for addressing upcoming debt maturities across its portfolio. If the company can replicate the favorable refinancing achieved in Nashville across other properties, it would significantly strengthen its balance sheet and investor sentiment. Monitoring RevPAR trends, occupancy recovery, and continued capital investments across the portfolio will be critical.
Additionally, how Ashford allocates the cash flow savings will matter. Investors will look for signs of deleveraging, resumed dividends, or targeted capital expenditures that boost long-term value. With REITs often valued on cash flow stability and dividends, clarity on these fronts could influence institutional positioning in the stock.
The Nashville refinancing should be seen as a positive step in a longer journey. For Ashford to rebuild credibility with investors, it will need to show sustained progress in debt reduction, margin improvement, and operational consistency.
What does this refinancing signal for REIT investors?
From an expert perspective, this refinancing is less about a single property and more about the message it sends. AHT has demonstrated that, even in a still-challenging rate environment, strong assets can attract lender confidence. That sets a precedent for other REITs looking to shore up balance sheets. It also shows that group-oriented urban hotels are regaining their edge, a trend that bodes well for convention-driven markets nationwide.
For investors, the refinancing underscores both opportunity and caution. The improved terms will enhance free cash flow, but the company’s high leverage and negative margins remain key overhangs. Traders may see short-term upside from sentiment shifts, but long-term investors will want more evidence of broad portfolio improvement before reassessing AHT’s valuation.
Final take on Ashford Hospitality Trust’s Nashville refinancing
Ashford Hospitality Trust’s $218.1 million refinancing of the Renaissance Nashville Hotel is a clear step toward stabilizing its capital structure and reducing financing costs. While the deal alone does not resolve the company’s broader balance sheet challenges, it represents tangible progress at a time when many REITs are still struggling with debt service burdens.
For Nashville, the transaction further elevates the city’s standing as a top-tier convention and hospitality market, where strong demand supports asset valuations and financing confidence. For Ashford, the deal demonstrates both operational strength at a flagship property and the management’s ability to extract favorable terms from lenders.
If replicated across its portfolio, such refinancing could mark a turning point in the company’s trajectory. For now, investors can view the Nashville refinancing as a welcome step in the right direction, but one that will need to be followed by continued discipline and execution across the REIT’s nationwide footprint.
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