Miami Courant

A dispute is brewing between a prominent Real Estate Investment Trust (REIT) and one of its lenders.

Rialto Capital Management allegedly is demanding from Ashford Hospitality every nickel back from its loan with hefty fees added on top. 

“Rialto has been very difficult to deal with,” said Ashford Trust’s chairman of the board Monty J. Bennett. “They seem to have no appreciation for the fact that what we are going through is a national version of 9/11. They're giving no grace and are charging outrageous fees.”

While Rialto CEO Jeffrey Krasnow did not immediately respond to requests for comment, Bennett said Ashford is doing what it can to do to stay afloat during the COVID-19 plague.

Nationwide, as of June 1, there were 1,787,680 coronavirus cases and 104,396 fatalities, according to the Centers for Disease Control.

“My revenues are down 93 percent, and these guys don't care one bit,” Bennett told Miami Courant. “My hotels are closed. My employees are all laid off and they want to stick me with extra fees on top?”

Ashford’s portfolio consists of a variety of hotels, such as Crowne Plaza, Embassy Suites and Courtyard Marriott, Many are closed due to COVID-19 government shutdown orders or are experiencing operating cash flow shortfalls. 

“Our business is way down and we're housing first responders for this crisis,” Bennett said in an interview. “What is Rialto doing to help our country? It’s going through a national pandemic.” 

The Bureau of Labor Statistics (BLS) jobs report revealed that the hospitality and leisure industry was the hardest hit by the coronavirus, losing 7.7 million jobs.

More than 8 in 10 hotel employers have had to lay off or furlough workers, according to an American Hotel & Lodging Association (AHLA) survey, and only 37 percent have been able to rehire any staff through economic relief measures such as the Paycheck Protection Program.

“The hospitality industry is in a fight for survival,” said Chip Rogers, president and CEO of AHLA. “While the hotel industry was one of the first affected by the pandemic, we have collectively stepped up to serve our communities during this public health crisis."

Rialto is known as an asset management platform focused on investing in the commercial real estate capital structure.

“They should have sympathy for the fact that hotels have no business whatsoever and give us a break,” Bennett said. “We need much longer maturities, abatement of debt service for six months and no fees.”