Ashford Trust Reports Third Quarter 2017 Results

DALLAS, Nov. 2, 2017 /PRNewswire/ -- Ashford Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust" or the "Company") today reported financial results and performance measures for the third quarter ended September 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 September 30, 2017 were owned as of the beginning of each of the periods presented.  Unless otherwise stated, all reported results compare the third quarter ended September 30, 2017, with the third quarter ended September 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 6.8%
• 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 $37.8 million or $0.40 per diluted share for the quarter
• Comparable RevPAR changed 0.0%, equating to $124.92, during the quarter
• Comparable RevPAR for all hotels not under renovation increased 0.4% to $126.64 during the quarter
• Adjusted EBITDA was $100.8 million for the quarter
• Adjusted funds from operations (AFFO) was $0.30 per diluted share for the quarter
• The Company's common stock is currently trading at an approximate 6.8% dividend yield
• During the quarter, the Company completed a $95 million offering of its 7.50% Series H Preferred Stock
• During the quarter, the Company completed the redemption of its 8.55% Series A Preferred Stock and a partial redemption of its 8.45% Series D Preferred Stock
• Subsequent to quarter end, the Company announced that it had refinanced its mortgage loan on the Hilton Boston Back Bay
• Subsequent to quarter end, the Company announced that it had refinanced a mortgage loan on seventeen hotels
• Capex invested during the quarter was $54 million

UPDATE ON HURRICANES HARVEY & IRMA 
The Company's hotels in the paths of Hurricanes Harvey and Irma did not sustain any significant damage with a few properties sustaining minor damage. All of the Company's properties are open and operating.  All of the Company's properties have comprehensive property, casualty, flood and business interruption insurance, subject to a maximum $10 million deductible. The Company believes no damage will exceed its coverage caps.  For purposes of calculating Adjusted EBITDA and Adjusted Funds From Operations, the Company has added back the uninsured costs relating to the hurricanes.

CAPITAL STRUCTURE
At September 30, 2017, the Company had total assets of $4.7 billion.  As of September 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%.  After taking into account the recently announced refinancings, the Company's total combined debt had a blended average interest rate of 5.4%.  

On August 16, 2017, the Company announced that it had priced an underwritten public offering of 3,800,000 shares, including the underwriter's overallotment, of 7.50% Series H Cumulative Preferred Stock at $25.00 per share. Dividends on the Preferred Stock will accrue at a rate of 7.50% per annum on the liquidation preference of $25.00 per share.

On September 18, 2017, the Company redeemed all of its issued and outstanding shares of its 8.55% Series A Cumulative Preferred Stock and 1,564,353 shares of its 8.45% Series D Cumulative Preferred Stock.

Subsequent to quarter end, on October 4, 2017, the Company redeemed 379,036 shares of its 8.45% Series D Cumulative Preferred Stock. Following the redemption of all of the Company's Series A Preferred Stock and a partial redemption of the Company's Series D Preferred Stock, the annual preferred dividend savings are expected to be approximately $520,000.

Subsequent to quarter end, on October 30, 2017, the Company announced it had refinanced a mortgage loan, secured by the Hilton Boston Back Bay, with an existing outstanding balance totaling approximately $95 million. The new loan totals $97 million and has a 5-year term.  The loan is interest only and provides for a floating interest rate of LIBOR + 2.00%.  This refinancing is expected to result in annual interest expense and principal payments savings of approximately $2.8 million.

Subsequent to quarter end, on October 31, 2017, the Company announced it had refinanced a mortgage loan, secured by seventeen hotels, with an existing outstanding balance totaling approximately $413 million. The new loan totals $427 million with a two-year initial term and five one-year extension options subject to the satisfaction of certain conditions.  The loan is interest only, provides for a floating interest rate of LIBOR + 3.00%, and contains flexible release provisions for the potential sale of assets.  This refinancing is expected to result in annual interest expense savings of approximately $9.8 million.  The next hard maturity for the Company is in February 2019.

PORTFOLIO REVPAR
As of September 30, 2017, the portfolio consisted of 120 properties.  During the third 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 changed 0.0%, equating to $124.92, for all hotels on a 0.0% increase in ADR and a 0.1% decrease in occupancy
• Comparable RevPAR increased 0.4% to $126.64 for hotels not under renovation on a 0.3% decrease in ADR and a 0.7% increase 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 September 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 third quarter ending September 30, 2017, payable on October 16, 2017, to shareholders of record as of September 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.  "This year, we have been able to complete several capital markets transactions that strengthened our balance sheet, are expected to result in over $13.7 million of annual expense savings for our platform, and extended our loan maturity schedule. Looking ahead, we remain committed to maximizing value for our shareholders as we focus on generating superior operating performance and executing on our strategy."

INVESTOR CONFERENCE CALL AND SIMULCAST
Ashford Hospitality Trust, Inc. will conduct a conference call on Friday, November 3, 2017, at 11:00 a.m. ET.  The number to call for this interactive teleconference is (719) 325-4865. A replay of the conference call will be available through Friday, November 10, 2017, by dialing (719) 457-0820 and entering the confirmation number, 8095589.

The Company will also provide an online simulcast and rebroadcast of its third 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, November 3, 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.