Ashford Incorporated, a hospitality real estate business with several luxury hotels in its portfolio, has skimmed $59 million from the PPP while laying off 95% of its staff and paying its leaders millions in dividends.
Ashford, Inc. owns luxury hotels in the United States including the Marriott Beverly Hills and Ritz Carlton Atlanta. Thus far, it has received more than $30 million US Paycheck Protection Program (PPP) via 42 smaller loans to its many subsidiaries. It is expected to receive another $29 million, even as funds have been exhausted for thousands of eligible small businesses.
At the same time, Ashford has laid off 95% of its 7,000 employees according to the Wall Street Journal. One of its affiliate companies, which owns over 100 hotels, also stopped making debt payments (totaling $4 billion).
Monty Bennett, the CEO and Chairman, has also reportedly received millions of dollars in preferred dividends as COVID-19 rages on and most of his employees are laid off. Bennett claims he has sacrificed as well by taking a 20% pay cut and deferring 25% of his cash bonus. Dividends have been halted for regular shareholders.
Wait just a moment, you might be asking. Doesn’t the PPP have a $10 million limit? Indeed it does, but large companies like Ashford have been able to spread claims over multiple subsidiaries to skirt that rule. The only limitation: each subsidiary must not have more than 500 employees.
With receipt of the funds, Bennett now plans to hire back some staff:
“75% or more of the proceeds will be used to bring our employees back to work with the balance to be used to pay utilities, rent, and debt service to lenders.”
But Brookfield Asset Management Inc., a lender to Ashford, is suing. It contends that Ashford engaged in a “fraudulent scheme” by transferring money back to the parent organization from individual hotels last month. Bennett calls Brookfield a bully.
CONCLUSION
Ashford likely did not engage in illegal conduct. But $59 million…seriously? While employees hope for crumbs and creditors are told to pound sound, Bennett cares for his personal wild animal park in the backyard of his Dallas home with lavish dividends during a time of crisis. Meanwhile, tens of thousands of small business have been told there are no PPP funds left. Something is not right in this picture.
image: Marriott Beverly Hills
It’s wealthy people like this who get my blood boiling. They already have far more wealth than they and their family could possibly need or spend in their lifetime and yet they keep figuring out ways to get more money at the expense of those less fortunate. Nothing wrong with accumulating wealth, but at least have a heart for the employees working for them. It’s too bad that the business world has so many people like these. Absolutely disgusting.
+1
Tip of the iceberg, or orgy of wholesale greed, theft and plundering of the U.S. Treasury. This will not end well. Think ekonomiks 101: hyperinflation from trillions of funny money flooding the economy. The 1 percenters, the connected are ensuring they get theirs while the gittin’s good. Total corruption, total lawlessness, total absence of ethics, moral hazard ensure a bad ending. And it will come. Meanwhile, the lumpen masses are happy, so far, with their 1,200 stiffilus check. The elites are laughing as they drive away from the bank vault.
I am of two minds here. On the one hand, a condition for full loan forgiveness is that you must essentially re-hire all furloughed or laid off employees no later than June 30th. Most of these hotel employees are the working class people suffering the most due to these stay home policies. So if this gets those employees the help they need, so be it if Ashford is taking advantage of a loophole.
On the other hand, they’re a publicly-traded REIT, so they should go to the debt and equity markets like everyone else and leave the money for small business who have no other option.
I agree. Just like the airlines this is a publicly traded company, and just like the airlines it can and should issue new stock to raise money. If this was a privately held business, therefore having a limited ability to raise cash in the current environment, then I would probably feel otherwise.
As a friend said to me, since we the taxpayers are the ones on the hook for something like $10k / taxpayer for this stimulus package, then give each of us the full $10k instead of giving us $1200 each and giving the other $8800 to special interests who will use 2020 losses to offset future taxes.
Yep.
The only one making out here is Good Ole Monty, makes me sick that Trumpy turn’s a blind eye to this.
Thank you for reporting this; but I have to say, when I see all the shuttered small businesses in my neighborhood, Ashford makes me sick. You (generously) say, “Ashford likely did not engage in illegal conduct,” but if these were PPP loans, if used for “unauthorized purposes” applicants may be held legally liable, “such as for charges of fraud.” The applicant certifies the “Current economic uncertainty makes this loans necessary to support the continuing operation of applicant.” The applicant certifies that “the funds will be used to retain workers …” And the applicant certifies true and accurate information, with penalties up to imprisonment and fines.
It’ll come around. Treasury is pushing out the door, but they’ll be making a naughty and nice list once resources allow. Good luck with the IRS.
“Ashford likely did not engage in illegal conduct.”
True, but conduct does not have to be illegal to be morally repugnant.
It is probably not a good idea to cross Brookfield.
I guess debit got blocked?