Ashford Trust Reports Second Quarter 2017 Results

DALLAS, Aug. 3, 2017 /PRNewswire/ -- Ashford Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust" or the "Company") today reported financial results and performance measures for the second quarter ended June 30, 2017. The performance measurements for Occupancy, Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), and Hotel EBITDA are comparable assuming each of the hotel properties in the Company's hotel portfolio as of June 30, 2017 were owned as of the beginning of each of the periods presented.  Unless otherwise stated, all reported results compare the second quarter ended June 30, 2017, with the second quarter ended June 30, 2016 (see discussion below).  The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

STRATEGIC OVERVIEW

• Opportunistic focus on upper-upscale, full-service hotels
• Targets moderate debt levels of approximately 55 - 60% net debt/gross assets
• Highly-aligned management team and advisory structure
• One of the highest long-term total shareholder returns in the industry
• Attractive dividend yield of approximately 7.7%
• Targets cash and cash equivalents at a level of 25 - 35% of total equity market capitalization for the purposes of:
• working capital needs at property and corporate levels
• hedging against a downturn in the economy or hotel fundamentals
• being prepared to pursue accretive investments or stock buybacks as those opportunities arise

FINANCIAL AND OPERATING HIGHLIGHTS

• Net loss attributable to common stockholders was $0.8 million or $0.01 per diluted share for the quarter
• Comparable RevPAR for all hotels increased 0.5% to $134.11 during the quarter
• Comparable RevPAR for all hotels not under renovation increased 1.4% to $134.59 during the quarter
• Comparable Hotel EBITDA Margin for all hotels not under renovation increased 11 basis points for the quarter
• Comparable Hotel EBITDA flow-through for all hotels not under renovation was 52% for the quarter
• Adjusted EBITDA was $125.5 million for the quarter
• Adjusted funds from operations (AFFO) was $0.52 per diluted share for the quarter
• The Company's common stock is currently trading at an approximate 7.7% dividend yield
• During the quarter, the Company announced that it had refinanced a mortgage loan on the Renaissance Nashville and Westin Princeton with an existing outstanding balance totaling approximately $104 million with a new loan totaling up to $181 million
• During the quarter, the Company announced the details of the redevelopment and acquisition of the meeting space at the Renaissance Nashville hotel. In connection with the redevelopment of the Nashville Convention Center, the Company entered into an agreement with the developers to acquire a permanent fee interest in the reconfigured facility which will contain all spaces currently used by the hotel as well as some additional meeting space
• During the quarter, the Company announced that it had refinanced a mortgage loan on the Hotel Indigo Atlanta with an existing outstanding balance totaling approximately $15.6 million with a new loan totaling $16.1 million
• During the quarter, the Company completed the conversion of the Marriott DFW Airport in Irving, Texas from brand-managed to franchised, with Remington Lodging taking over property management
• During the quarter, the Company announced the sale of the 495-room Crowne Plaza Ravinia in Atlanta, Georgia for $88.7 million ($179,000 per key)
• Capex invested during the quarter was $53.3 million

TRANSACTION HIGHLIGHTS

On May 10, 2017, the Company announced details for the redevelopment and acquisition of the meeting space at its Renaissance Nashville hotel. In connection with the redevelopment of the Nashville Convention Center ("NCC"), the Company entered into an agreement with the developers to acquire a permanent fee interest in the reconfigured facility which will contain all spaces currently used by the hotel in the existing NCC under the current 99-year lease as well as the additional meeting space that is under the current 30-year lease. The hotel currently has approximately 13,000 square feet of meeting space that is owned fee simple and approximately 48,000 square feet of meeting space that is subject to ground leases.  This redevelopment will eventually bring the total meeting space available in the hotel to approximately 75,000 square feet, all of which will be owned fee simple by the Company.  The Company plans to spend approximately $20 million to renovate the new meeting space.

During the quarter, the Company completed the conversion of the Marriott DFW Airport in Irving, Texas from brand-managed to franchised, with Remington Lodging taking over property management. Remington will operate the property under a new long-term management agreement with a total term of 35 years including extension options.  The hotel will continue to operate as a Marriott pursuant to a long-term franchise agreement with Marriott International Inc.  In connection with the transfer, Remington will also take over operations of a laundry facility which services several area hotels.

On June 29, 2017, the Company announced the sale of the 495-room Crowne Plaza Ravinia in Atlanta, Georgia for $88.7 million ($179,000 per key). The sales price represents a trailing 12-month cap rate of 5.6% on net operating income and a trailing 15.3x EBITDA multiple. 

CAPITAL STRUCTURE

At June 30, 2017, the Company had total assets of $4.8 billion.  As of June 30, 2017, the Company had $3.7 billion of mortgage debt. The Company's total combined debt had a blended average interest rate of 5.7%.

On May 10, 2017, the Company announced that it had refinanced a mortgage loan, secured by the Westin Princeton and Renaissance Nashville hotels, with an existing outstanding balance totaling approximately $104 million. The new loan totals $181 million consisting of an initial advance of $165 million with future advances totaling up to $16 million as reimbursement for capital expenditures.  The loan has a five-year term and provides for a floating interest rate of LIBOR + 3.00%.  The loan is interest only until July 2020 with $750,000 quarterly amortization thereafter.  After closing costs, reserves, and the full funding of the loan, the Company expects to realize excess proceeds of approximately $70 million from the refinancing.

On May 24, 2017, the Company announced that it had refinanced a mortgage loan, secured by the Hotel Indigo Atlanta Midtown, with an existing outstanding balance totaling approximately $15.6 million.  The new loan totals $16.1 million with a three-year term and two, one-year extension options subject to the satisfaction of certain conditions.  The loan, which is interest only for the first two years with a 30-year amortization schedule based on a 6% interest rate starting in the third year, provides for an interest rate of LIBOR + 2.90%.  The next hard maturity for the Company is in January 2018. 

PORTFOLIO REVPAR

As of June 30, 2017, the portfolio consisted of 120 properties.  During the second quarter of 2017, 107 of the Company's hotels were not under renovation. The Company believes reporting its operating metrics for its hotels on a comparable total basis (all 120 hotels) and comparable not under renovation basis (107 hotels) is a measure that reflects a meaningful and focused comparison of the operating results in its portfolio.  Details of each category are provided in the tables attached to this release.

• Comparable RevPAR increased 0.5% to $134.11 for all hotels on a 1.2% increase in ADR and a 0.7% decrease in occupancy
• Comparable RevPAR increased 1.4% to $134.59 for hotels not under renovation on a 1.5% increase in ADR and a 0.1% decrease in occupancy

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS

The Company believes year-over-year Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin comparisons are more meaningful to gauge the performance of the Company's hotels than sequential quarter-over-quarter comparisons.  Given the substantial seasonality in the Company's portfolio and its active capital recycling, to help investors better understand this seasonality, the Company provides quarterly detail on its Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin for the current and certain prior-year periods based upon the number of hotels in the Company's portfolio as of the end of the current period.  As the Company's portfolio mix changes from time to time so will the seasonality for Comparable Hotel EBITDA and Comparable Hotel EBITDA Margin.  The details of the quarterly calculations for the previous four quarters for the 120 hotels are provided in the table attached to this release.

COMMON STOCK DIVIDEND

On June 14, 2017, the Company announced that its Board of Directors had declared a quarterly cash dividend of $0.12 per diluted share for the Company's common stock for the second quarter ending June 30, 2017, payable on July 17, 2017, to shareholders of record as of June 30, 2017.

"We continue to see the operational and value-added benefits from our high quality, diverse portfolio," commented Douglas A. Kessler, Ashford Trust's President and Chief Executive Officer.  "During the quarter, we were able to finalize value-enhancing transactions at two of our larger assets, with the meeting space redevelopment and acquisition at the Renaissance Nashville as well as the franchise conversion and installation of Remington as manager at the DFW Marriott, both of which we believe should drive significant additional value in those assets.  Additionally, completing the two financings this quarter better positions our balance sheet and we have no additional maturities in 2017.  Looking ahead, we remain committed to maximizing value for our shareholders as we focus on generating superior operating performance and executing on our corporate strategy."

INVESTOR CONFERENCE CALL AND SIMULCAST

Ashford Hospitality Trust, Inc. will conduct a conference call on Friday, August 4, 2017, at 11:00 a.m. ET.  The number to call for this interactive teleconference is (719) 325-2496. A replay of the conference call will be available through Friday, August 11, 2017, by dialing (719) 457-0820 and entering the confirmation number, 9274617.

The Company will also provide an online simulcast and rebroadcast of its second quarter 2017 earnings release conference call.  The live broadcast of Ashford Hospitality Trust's quarterly conference call will be available online at the Company's web site, www.ahtreit.com on Friday, August 4, 2017, beginning at 11:00 a.m. ET.  The online replay will follow shortly after the call and continue for approximately one year.

Substantially all of our non-current assets consist of real estate investments and debt investments secured by real estate.  Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time.  Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to assist in evaluating a real estate company's operations. These supplemental measures include FFO, AFFO, EBITDA, and Hotel EBITDA.  FFO is computed in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the NAREIT definition differently than us.  None of FFO, AFFO, EBITDA, or Hotel EBITDA represents cash generated from operating activities as determined by GAAP and should not be considered as an alternative to a) GAAP net income (loss) as an indication of our financial performance or b) GAAP cash flows from operating activities as a measure of our liquidity, nor are such measures indicative of funds available to satisfy our cash needs, including our ability to make cash distributions.  However, management believes FFO, AFFO, EBITDA, and Hotel EBITDA to be meaningful measures of a REIT's performance and should be considered along with, but not as an alternative to, net income and cash flow as a measure of our operating performance.

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Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing opportunistically in the hospitality industry in upper upscale, full-service hotels.

Ashford has created an Ashford App for the hospitality REIT investor community.  The Ashford App is available for free download at Apple's App Store and the Google Play Store by searching "Ashford."

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995.  Forward looking statements in this press release include, among others, statements about the Company's strategy and future plans.  These forward-looking statements are subject to risks and uncertainties.  When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements.  Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford Trust's control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation:  general volatility of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy; and the degree and nature of our competition. These and other risk factors are more fully discussed in Ashford Trust's filings with the Securities and Exchange Commission.  EBITDA is defined as net income before interest, taxes, depreciation and amortization.  EBITDA yield is defined as trailing twelve month EBITDA divided by the purchase price.  A capitalization rate is determined by dividing the property's annual net operating income by the purchase price.  Net operating income is the property's funds from operations minus a capital expense reserve of either 4% or 5% of gross revenues.  Hotel EBITDA flow-through is the change in Hotel EBITDA divided by the change in total revenues.  Hotel EBITDA Margin is Hotel EBITDA divided by total revenues.  Funds from operations ("FFO"), as defined by the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") in April 2002, represents net income (loss) computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains (or losses) from sales of properties and extraordinary items as defined by GAAP, plus depreciation and amortization of real estate assets, and net of adjustments for the portion of these items related to unconsolidated entities and joint ventures. 

The forward-looking statements included in this press release are only made as of the date of this press release.  Investors should not place undue reliance on these forward-looking statements.  We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.

SOURCE Ashford Hospitality Trust, Inc.