Business Context and Reporting Period
Company: Ashford Hospitality Trust, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: March 3, 2009
Event Date: March 3, 2009
The Company's Operating Partnership, Ashford Hospitality Limited Partnership, entered into a derivative transaction to manage interest rate exposure.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, or general debt levels. It specifically details a derivative instrument:
- Instrument Type: 1-year "flooridor"
- Counterparty: UBS
- Notional Amount: $3.6 billion
- Term: December 14, 2009 to December 13, 2010
- Related Instrument: $1.8 billion interest rate floor arrangement entered into on March 13, 2008
Material Changes
The Company executed a new derivative transaction to effectively fund obligations under an existing interest rate floor. The new flooridor has a notional amount twice that of the original interest rate floor ($3.6 billion vs. $1.8 billion). This structure provides the Operating Partnership with an amount in excess of its obligations under the original floor while LIBOR remains between 1.25% and 0.75%.
Guidance, Outlook, and Risks
Management Commentary: The transaction is designed to fund the Operating Partnership's obligations under the prior Interest Rate Floor arrangement.
Contingencies: The summary provided in the filing is qualified in its entirety by the executed Confirmation of Trade, which will be filed as an exhibit to the Form 10-Q for the quarter ending March 31, 2009.
Risks: The filing does not explicitly list risk factors, though the transaction is contingent on LIBOR rates remaining within a specific range (0.75% to 1.25%) to generate the described excess funding.
Investor Verification Checklist
- Verify the specific terms and payout mechanics in the Confirmation of Trade to be filed with the Form 10-Q.
- Confirm the current LIBOR rate relative to the 0.75% - 1.25% threshold to assess the immediate economic impact.
- Review the Company's total debt load to understand the proportion of the $3.6 billion notional amount relative to total liabilities.
- Check subsequent filings for any amendments or terminations of the flooridor prior to its December 2010 maturity.