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8-K - 8-K - ASHFORD HOSPITALITY TRUST INC | ahtinvestorpresentation8-k.htm |
Company Presentation – September 2016
Safe Harbor
2
In keeping with the SEC's "Safe Harbor" guidelines, certain statements made during this presentation could be
considered forward-looking and subject to certain risks and uncertainties that could cause results to differ
materially from those projected. 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 forward-looking statements include, but are not limited to, our business and investment strategy, our
understanding of our competition, current market trends and opportunities, projected operating results, and
projected capital expenditures.
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 the Company'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 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. EBITDA, FFO, AFFO, CAD and other terms are
non-GAAP measures, reconciliations of which have been provided in prior earnings releases and filings with the
SEC.
This overview is for informational purposes only and is not an offer to sell, or a solicitation of an offer to buy or sell,
any securities of Ashford Hospitality Trust, Inc. or any of its respective affiliates, and may not be relied upon in
connection with the purchase or sale of any such security.
Ashford Hospitality Trust Vision
Opportunistic platform focused on full-service hotels
3
Management team more highly-aligned with shareholders than our
peers
Appropriate use of financial leverage
Best in class hotel managers
Superior long-term total shareholder return performance
Announced strategy refinements to improve shareholder value
Recent Developments
4
Q2 2016 RevPAR growth of 4.9%
Q2 2016 AFFO per share growth of 17.6%
Q2 2016 Adjusted EBITDA growth of 10.7%
In June 2016, completed the planned sale of the 5-hotel select-service portfolio for
$142 million with expected net proceeds of approximately $37 million
In August 2016, completed the redemption of all outstanding shares of 9.0% Series E
preferred stock funded by the recently-completed offering of 7.375% Series F
preferred stock
Announced enhancements to corporate governance policies
Announced planned sale of the 151-room Courtyard Palm Desert and 130-room
Residence Inn Palm Desert for $36 million
In September, completed the sale of the 124-room Hampton Inn & Suites
Gainesville for approximately $27 million
Best In Class Hotel Managers
86 properties managed by
Remington representing 59% of
portfolio hotel EBITDA
29 properties managed by
Marriott representing 29% of
portfolio hotel EBITDA
Remaining 11 properties
managed by Hilton, Starwood,
Hyatt, and Interstate
Best in class hotel property
managers and asset managers
that drive strong performance
through ROI initiatives, revenue
optimization, and cost cutting
measures
5 Based on TTM Hotel EBITDA as of June 30, 2016 for 126 owned hotels as of September 1, 2016
52%
58% 59%
43% 41% 42%
22%
53%
60% 59%
68% 70%
47%
57%
-200%
-175%
-150%
-125%
-100%
-75%
-50%
-25%
0%
25%
50%
75%
100%
2008 2009 2010 2011 2012 2013 2014 2015
Non-Remington Remington
Remington Outperformance - Profitability
Remington has outperformed in EBITDA flow-through 7 out of the
last 8 years
6 NOTE: Remington managed hotels owned by Ashford Trust and Ashford Prime as compared to Non-Remington managed hotels
Hotel EBITDA Flow-Through
Superior management of downside risk and cash flow loss
300
-800 -808%
334%
90%
-19% -24%
25%
129%
59%
124%
47%
26%
-9% -3%
154%
66% 70%
249%
420%
75%
107%
72%
20%
-24%
-7%
-50%
0%
50%
100%
150%
200%
250%
300%
350%
400%
450%
Inception 10-Yr 9-Yr 8-Yr 7-Yr 6-Yr 5-Yr 4-Yr 3-Yr 2-Yr 1-Yr
Peer Avg AHT
Demonstrated Long-Term Track Record
7
(1) Since IPO on August 26, 2003
Peer average includes: CHSP, CLDT, DRH, FCH, HST, HT, INN, LHO, RLJ, SHO
Returns as of 9/1/16
Source: SNL
Total Shareholder Return
Long-term performance
significantly outperforms
peers
(1)
Highest Insider Ownership
8
Public Lodging REITs include: CHSP, CLDT, DRH, FCH, HST, HT, INN, LHO, PEB, RLJ, SHO
Source: Company filings.
* Insider ownership for Ashford Trust includes direct & indirect interests & interests of related parties
Insider Ownership
Most highly aligned management team among our peers
18%*
6%
3% 3% 3%
2% 2% 2% 2%
1% 1%
1% 1%
0.0%
2.0%
4.0%
6.0%
8.0%
10.0%
12.0%
14.0%
16.0%
18.0%
20.0%
AHT HT RLJ CLDT FCH Peer Avg CHSP INN HST PEB DRH SHO LHO
Attractive Dividend Yield
9 Source: Company filings and market data
Dividend Yield (as of 9/1/16)
Highest dividend yield in the industry and with
attractive coverage ratio of 3.2x
7.1%
6.7%
6.4% 6.3% 6.2% 6.1%
5.9%
5.7%
5.0%
4.9%
4.7% 4.6%
3.5%
3.2%
2.7%
1.5%
0.0%
1.0%
2.0%
3.0%
4.0%
5.0%
6.0%
7.0%
8.0%
AHT LHO CHSP APLE CLDT XHR HT RLJ Peer
Avg
DRH PEB HST INN FCH AHP SHO
10 Ashford Trust Hotels
High Quality, Geographically Diverse Portfolio
Le Pavillon Hotel
New Orleans, LA
Lakeway Resort & Spa
Austin, TX
Hilton Costa Mesa
Costa Mesa, CA
Marriott Fremont
Fremont, CA
Le Meridien Minneapolis
Minneapolis, MN Chicago Silversmith
Chicago, IL
Hilton Back Bay
Boston, MA
The Churchill
Washington, D.C.
W Atlanta Downtown
Atlanta, GA
Crowne Plaza Key West
Key West, FL
Marriott Sugar Land
Sugar Land, TX
Hilton Santa Fe
Santa Fe, NM
Renaissance Nashville
Nashville, TN
Westin Princeton
Princeton, NJ
Marriott Beverly Hills
Beverly Hills, CA
Embassy Suites Portland
Portland, OR
Marriott Gateway
Arlington, VA
Top 25
73.0%
Top 50
17.9%
Other
9.1%
Portfolio Overview
11
TTM Hotel EBITDA as of June 30, 2016 for 126 owned hotels as of September 1, 2016
Hotel EBITDA in thousands
Hotel EBITDA by Brand Hotel EBITDA by Manager
Hotel EBITDA by MSA Hotel EBITDA by Chainscale
Top Ten Markets
Marriott
49.6%
Hilton
27.2%
Hyatt
4.1%
IHG
5.1%
Starwood
8.0%
Independent
6.0%
Marriott
29.2%
Hilton
5.4%
Hyatt
3.4%
Remington
59.0%
Starwood
2.5%
Interstate
0.5%
Upscale
33.7%
Upper-Upscale
54.3%
Luxury
4.8%
Upper-Midscale
3.3%
Independent
3.9%
TTM Hotel % of
EBITDA Total
Washington DC Area $47,325 9.9%
San Fran/Oakland, CA $33,567 7.1%
Los Angeles Metro Area $33,107 7.0%
Atlanta, GA $30,288 6.4%
NY/NJ Metro Area $29,932 6.3%
DFW, X $26,575 5.6%
Boston, MA $25,422 5.3%
Nashville, TN $23,557 5.0%
MN/St. Paul Area $16,071 3.4%
Houston, TX $13,465 2.8%
Total Portfolio $475,880 100.0%
Investment Strategy
12
Full-service hotels
Upper-upscale hotels
Focus on all markets
Appropriate use of leverage
Focus on franchised properties where
we can add significant value
Investment Strategy Competitive Advantage
Increased deal flow
Less competition
Improves selectivity
More value-add opportunities
Core competency of Remington
Debt markets expertise
Extensive relationships with brokers,
lenders, institutions, and brands
Portfolio opportunities given diverse
asset locations and quality
Renaissance Nashville: Partnering with developer to redevelop Nashville Convention Center, resulting in new,
premium meeting space
Marriott Crystal Gateway: Spending $30.0mm on major renovations; adding 6 keys by moving fitness center and
concierge lounge
Hilton Boston Back Bay: Shifted revenue strategies to increase off-season occupancy estimated to add $3mm in
revenue
Marriott Beverly Hills: 82% RevPAR growth since $26mm conversion from Crowne Plaza
Embassy Suites Portland: Aggressively marketing multiple retail outlets; upgrading TV and WiFi to improve guest
experience
Ritz Carlton Atlanta: Completed significant restaurant renovation; expanded and updated gift shop into
upscale retail market
Hyatt Savannah: Increased premium rooms inventory by 70 rooms to drive ADR; repositioning food and
beverage outlets and full lobby renovation in 2017
Marriott DFW: Comprehensive ballroom and meeting space renovation in summer 2017
Marriott Bridgewater: Converted 30 king rooms to double/double rooms to capture more group business;
increase premium room type by 43.5% to capture higher ADR
Embassy Suites Santa Clara: Spending $10.4mm on 2017 guestrooms and lobby renovation to include larger
market and fitness area; implementing Profit Improvement Plan with estimated annual savings of $90k
13
Asset Management Initiatives
Case Study – Conversion to Remington Managed
14
Implemented Strategies:
Increased club room premium pricing
from $30 to $45
Increased corporate group room nights
to 25% mid-week to ensure sell-outs and
push rate
Improved pattern management and
business mix to increase higher rated
retail contribution
Moved to premium pricing, allowing
restriction of premium rooms and
preferred business management
Aggressively priced preferred rooms rates
25%-30% YOY
Marriott Fremont – Fremont, CA
*$ in Thousands
(1) As of June 30, 2016
Announced forward cap rate and EBITDA multiple of 8.1% and 10.0x, respectively
Actual cap rate and EBITDA multiple of 10.9% and 7.9x, respectively
Current cap rate and EBITDA multiple of 14.4% and 6.1x, respectively (1)
TTM
Pre-Takeover
TTM
Post-Takeover
Increase
(%, BPs)
Total Revenue* $19,140 $22,153 15.7%
RevPAR $107.1 $130.5 21.8%
GOP margin 27.0% 38.1% +1,116
EBITDA margin 20.9% 30.0% +916
Marriott Fremont
Case Study – Marriott Beverly Hills Conversion
15
16
Case Study – Marriott Beverly Hills Conversion (cont.)
Prior to the conversion, the hotel had a TTM Net Operating Income
of $6.3mm
Trust invested $21mm, net of key money from Marriott*
Ashford expects Net Operating Income to increase by
approximately $2.5mm following conversion and stabilization
Capping incremental Net Operating Income at an assumed 6.5%
cap rate and deducting the CapEx investment equates to an
estimated:
$17mm+ in value creation
* Not all of this capital was incremental. Hotel was in need of a renovation. “Refresh”
capital requirements per Crowne standards were estimated to be $8mm.
17
Case Study – Marriott Beverly Hills Conversion (cont.)
The Marriott Beverly Hills officially opened on July 1, 2015 and the
renovation concluded in August
Received an award from Marriott International for renovation
excellence
Q2 2016 YTD performance has been great:
Total revenue growth of 84%
Room rate growth of 48%
Hotel EBITDA flow-through of 53%
A gain of 5,100 bps in market share versus its competitors
18
Case Study – Marriott Beverly Hills Conversion (cont.)
Lobby Bar Restaurant
Front Desk
Lobby
19
Case Study – Marriott Beverly Hills Conversion (cont.)
Guestroom
Boardroom Guestroom
Club Lounge
Opportunity – W Atlanta Downtown
20
Acquired in July 2015
237 keys, 9,000 sq. ft. of meeting
space
Located in the heart of Downtown
Atlanta
Close proximity to the downtown and
midtown demand generators:
Centennial Olympic Park, the Atlanta
Aquarium, and Georgia Dome
Potential to reconcept or lease
underutilized food and beverage
outlets
New management of the on-premise
digital billboard
Renegotiated valet parking agreement
Potential impact to EBITDA of
approximately +$850,000
Q2 2016 RevPAR growth and EBITDA
flow-through of 12.8% and 83%,
respectively
W Atlanta – Atlanta, GA
W Atlanta – Atlanta, GA
Hotel Overview:
Opportunities:
Capital Structure and Net Working Capital
Appropriate use of leverage to more cost effectively invest in the hotel cycle
Current net working capital of approximately $3.75 per share
All debt is non-recourse, property level mortgage debt
Targeted cash balance of 25% to 30% of market capitalization
Hedge unfavorable economic shocks
21
As of June 30, 2016
(1) At market value as of September 1, 2016
(2) Adjusted for sale of the Hampton Inn & Suites Gainesville
Enterprise Value Net Working Capital
Cash & Cash Equivalents(2) $266.9
Restricted Cash 163.1
Investment in Securities Fund 53.1
Accounts Receivable, net 55.3
Prepaid Expenses 24.3
Due From Affiliates, net (4.9)
Due from Third Party Hotel Managers 15.1
Market Value of Ashford, Inc. Investment(1) 27.2
Total Current Assets $599.9
Accounts Payable, net & Accrued Expenses $139.3
Dividends Payable 23.1
Total Current Liabilities $162.4
Net Working Capital $437.5
Figures in millions except per share values
Stock Price (As of September 1, 2016) $6.76
Fully Diluted Shares Outstanding 116.6
Equity Value $788.1
Plus: Preferred Equity 393.9
Plus: Debt(2) 3,777.3
Total Market Capitalization $4,959.3
Less: Net Working Capital (437.5)
Total Enterprise Value $4,521.8
$394.9
$203.3
$5.5
$97.7
$282.9
$601.4
$710.7
$1,483.1
$0.0
$200.0
$400.0
$600.0
$800.0
$1,000.0
$1,200.0
$1,400.0
$1,600.0
2017 2018 2019 2020 2021 Thereafter
Fixed-Rate Floating-Rate
Debt Maturities and Leverage
Target Net Debt/Gross Assets of 50-60%
Maintain mix of fixed and floating rate debt (Currently 74% floating & 26% fixed)
Ladder maturities
Exclusive use of property-level, non-recourse debt
22
As of June 30, 2016
(1) Assumes extension options are exercised
(2) Adjusted for sale of the Hampton Inn & Suites Gainesville
Note: All debt yield statistics are based on EBITDA to principal.
Debt Maturity Schedule (mm)(1) (2)
Debt Yield:
12.8%
Debt Yield:
21.1%
Debt Yield:
14.4%
Debt Yield:
11.4%
Debt Yield:
11.1%
Debt Yield:
14.0%
Corporate Governance Enhancements
23
Modification of the Company’s Equity Incentive Plan to
require stock ownership by directors and officers to match
the stock ownership guidelines outlined in the current
Corporate Governance Guidelines
Modification of the Company’s Equity Incentive Plan to
require minimum vesting periods on stock options and stock
appreciation rights issued under the plan
Modification of the Company’s By-laws to reduce the
threshold from 35% to 30% of outstanding shares to call a
special meeting of shareholders.
Modification of the Company’s stock ownership guidelines
to increase the required share ownership for director’s from
three times the director’s annual board retainer fee to four
times
Key Takeaways
24
Focused on increasing shareholder value through
simplifying strategy and improving portfolio quality
Attractive industry fundamentals
Strong management team with a long track record of
creating shareholder value
Highest dividend yield in the industry
Highly-aligned platform through management structure
and high insider ownership
Company Presentation – September 2016