Ashford Hospitality Tumbles On Loan Portfolio Woes

NEW YORK (AP) — Shares of hotel owner Ashford Hospitality Trust Inc. tumbled on Tuesday after an analyst said the hotel investor is likely to write off a $164 million note due to the Chapter 11 bankruptcy filing of Extended Stay Hotels LLC.

Robert W. Baird analyst David Loeb downgraded the Dallas-based company's stock to an "underperform" rating from "neutral." The shares dropped 77 cents, or 20 percent, to $3.08 in afternoon trading. The stock has traded between 86 cents and $5.75 during the past 52 weeks.

Loeb said Extended Stay's bankruptcy filing on Monday will likely lead to a total loss of Ashford's investment in Extended Stay's mezzanine debt.

Ashford representatives were not immediately available for comment Tuesday.

Spartanburg, S.C.-based Extended Stay owns more than 680 hotels in the U.S. and Canada catering to long-term business travelers under brands including Extended Stay Deluxe, Extended Stay America Efficiency Studios and Homestead Studio Suites.

The company was acquired in June 2007 by David Lichtenstein's real estate investment company, Lightstone Group, in a highly levered deal financed by about $7.4 billion in loans. That acquisition took place near the height of the hotel market, prior to the credit crunch and a sharp downturn in hotel occupancies.