Business Context and Reporting Period
Company: Ashford Hospitality Trust, Inc.
Filing Type: Form 8-K (Current Report)
Date of Report: December 2, 2008
Event Date: December 2, 2008
Context: The Operating Partnership of Ashford Hospitality Trust, Inc. entered into a material definitive agreement regarding interest rate hedging instruments.
Key Financial Metrics
This filing does not report revenue, profit, cash flow, margins, or general liquidity metrics. It specifically details a hedging transaction:
- Hedged Notional Amount: $1.8 billion
- Instrument Type: 1-year "flooridors"
- Counterparties: Bank of America, N.A. and Credit Suisse International
- LIBOR Strike Price: 0.75%
- Underlying Debt: $900 million per flooridor (two flooridors total)
Material Changes
The filing reports the execution of a new hedging arrangement on December 2, 2008. This transaction is related to a $1.8 billion interest rate floor arrangement previously entered into on March 13, 2008. The new flooridors effectively fund the Operating Partnership's obligations under the original Interest Rate Floor while LIBOR remains between 1.25% and 0.75%.
Guidance, Outlook, and Risks
Management Commentary: The filing states that the summary provided is not complete and is qualified in its entirety by the executed Confirmation of Trade, which will be filed as an exhibit to the Company's Annual Report on Form 10-K for the year ending December 31, 2008.
Risks/Contingencies: The filing does not explicitly list new risks or contingencies beyond the terms of the derivative agreement itself. The filing text does not provide a clear value for any financial impact or guidance beyond the structural details of the hedge.
Investor Verification Checklist
- Verify the full terms of the "flooridor" agreement in the Confirmation of Trade exhibit to be filed in the 2008 Form 10-K.
- Confirm the current LIBOR rate relative to the 0.75% strike price and the 1.25% threshold to assess immediate funding obligations.
- Review the original March 13, 2008, Interest Rate Floor agreement to understand the full scope of the $1.8 billion hedge.
- Monitor the creditworthiness of the counterparties (Bank of America, N.A. and Credit Suisse International) given the 2008 financial market environment.