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| 8-K - 8-K - ASHFORD HOSPITALITY TRUST INC | ahtinvestorpresentation8-k.htm |
March 2018
Forward Looking Statements and Non-GAAP Measures
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 or debt amount. 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 or in the appendix to this presentation.
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.
Overview
3
Opportunistic
platform focused
on upper upscale,
full-service hotels
Disciplined capital
management
Targets debt levels
of 55-60% net
debt/gross assets
Targets cash level
of 25-30% of total
equity market cap
Highest insider
ownership
Attractive
dividend yield
Value added
asset
management
Valuation
opportunity
Le Pavillon
New Orleans, LA
Ritz-Carlton,
Atlanta, GA
Embassy Suites,
Walnut Creek, CA
Hilton,
Parsippany, NJ
Management Team
4
33 years of real estate &
hospitality experience
15 years with Ashford
10 years with Goldman Sachs
Stanford BA, MBA
DOUGLAS A. KESSLER
Chief Executive Officer &
President
18 years of hospitality experience
15 years with Ashford
3 years with ClubCorp
CFA charterholder
Southern Methodist University BBA
DERIC S. EUBANKS, CFA
Chief Financial Officer
33 years of hospitality experience
15 years with Ashford (18 years
with Ashford predecessor)
Pepperdine University BS,
University of Houston MS, CPA
MARK L. NUNNELEY
Chief Accounting Officer
33 years of hospitality & legal
experience
15 years with Ashford (11 years
with Ashford predecessor)
University of North Texas BS,
University of Houston JD
DAVID A. BROOKS
Chief Transaction Officer,
General Counsel
13 years of hospitality experience
8 years with Ashford (5 years with
Ashford predecessor)
5 years with Stephens Investment
Bank
Oklahoma State University BS
JEREMY J. WELTER
Chief Operating Officer
13 years of hospitality experience
13 years with Ashford
3 years of M&A experience at
Dresser Inc. & Merrill Lynch
Princeton University AB
J. ROBISON HAYS
Chief Strategy Officer
Marriott
31%
Hilton
6%
Hyatt
3%
Remington
59%
Interstate
<1%
Portfolio Overview
5 (1) As of December 31, 2017, net rooms, excludes Worldquest
(2) Hotel EBITDA in thousands
Note: the company recently sold SpringHill Suites Glen Allen
120
Hotels(1)
25,031
Rooms(1)
$5.7B
Gross Assets(1)
31
States(1)
TOP TEN METRO AREAS(1),(2)
PORTFOLIO BY HOTEL EBITDA(1)
Brand Property Manager Chainscale
$123
RevPAR(1)
MSA
Marriott
58%
Hilton
29%
Hyatt
5%
IHG
2%
Indep.
6%
Top 25
74%
Top 50
17%
Other
9%
Upscale
32%
Upper Upscale
51%
Luxury
8%
Upper
Midscale
3%
Independent
6%
2017 % of
EBITDA Total
Washington DC $46,599 9.9%
San Fran/Oakland, CA $35,024 7.5%
Los Angeles, CA $34,037 7.2%
New York/New Jersey $31,400 6.7%
Boston, MA $26,423 5.6%
Nashville, TN $26,035 5.5%
Atlanta, GA $25,925 5.5%
DFW, TX $25,690 5.5%
Minn./St. Paul, MN $14,610 3.1%
Austin, TX $12,923 2.8%
Other Areas $190,912 40.7%
Total Portfolio $469,579 100.0%
6
<1%
Geographically Diverse
Washington D.C. – 9.9%
Los Angeles – 7.2%
San Francisco – 7.5%
New York – 6.7%
Boston – 5.6%
Nashville – 5.5%
Atlanta – 5.5%
Dallas / Ft. Worth – 5.5% Minneapolis – 3.1%
Tampa – 2.6% Houston – 2.7% Miami – 2.7%
Orlando – 2.2%
San Diego – 1.5%
Philadelphia – 1.6%
Portland – 2.1%
Key West – 1.5%
Indianapolis – 2.4%
Jacksonville – 2.4% Austin – 2.8%
Las Vegas – 1.8%
Phoenix – 1.4%
Savannah – 2.5%
Notes:
1.) Percent of total portfolio Hotel EBITDA for the 120 properties owned as of December 31, 2017
2.) The company recently sold SpringHill Suites Glen Allen
High Quality
7
Crowne Plaza La Concha
Key West, FL
W Atlanta Downtown
Atlanta, GA
Marriott Beverly Hills
Beverly Hills, CA
Le Pavillon
New Orleans, LA
One Ocean
Jacksonville, FL
Le Meridien Minneapolis
Minneapolis, MN
W Minneapolis
Minneapolis, MN
The Silversmith
Chicago, IL
Hyatt Coral Gables
Coral Gables, FL
The Churchill
Washington, D.C.
Renaissance Nashville
Nashville, TN
Hyatt Savannah
Savannah, GA
Full-Service Rationale
8
ESTIMATED CAP RATES
6.5% 8.5+%
VALUE-ADD OPPORTUNITIES
39%
Franchised Upper Upscale Rooms as a % of
Total Upper Upscale Chain Scale
Segment(1)
W Atlanta Downtown
Atlanta, GA
Limited
Service
$10.5b
43%
Full Service
(Non-Luxury)
$11.6b
47%
Full Service
(Luxury)
$ 2.5b
10%
Limited Service Full Service (Non-Luxury) Full Service (Luxury)
HIGHER TRANSACTION ACTIVITY(2)
(1) Estimate based upon MAR, HLT, H, and IHG branded rooms
(2) 2017 Hotel Transactions from Real Capital Analytics
Disciplined Capital Management
9
Track record of increasing shareholder returns by capitalizing upon
cyclical changes and advantageous pricing situations
COMMON SHARE BUYBACKS
Financial Crisis
73.6M 50% $3.28
Shares
Of Outstanding
Shares
Average
Buyback
RECENT PREFERRED EQUITY ACTIVITY
9.0%
Old Coupon
7.4%
2016 2017
New Coupon
8.5%
Old Coupon
7.5%
New Coupon
$218 $170
$305
$574
$72 $90
$147
$89 $112
$18
$97 $81
$45
$52
$68
$65
$400
$76 $112
$17
$275 $230
$200
$10 $11
$73
$116 $218
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
M
ill
io
n
s
Common Raises Common Buybacks Preferred Raises Preferred Buybacks / Redemptions
Leverage Target
10
Non-recourse, property level mortgage
debt
Leverage policy consistent since IPO
(1) (1)
(1) Based on public filings; adjusted for unconsolidated Highland JV from 2011 – 2014
Note: Gross Assets and Net Debt adjusted for cash & cash equivalents and other liquid cash-like items as reported
42.4%
56.1%
49.2%
56.4% 55.5%
59.6%
55.7%
58.7% 58.5% 59.1% 58.3%
64.9%
61.2% 61.7%
20.0%
25.0%
30.0%
35.0%
40.0%
45.0%
50.0%
55.0%
60.0%
65.0%
70.0%
$0
$1,000
$2,000
$3,000
$4,000
$5,000
$6,000
2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
M
ill
io
n
s
Gross Assets Net Debt Net Debt / Gross Assets
Cash Target
11
(1) Based on public filings; adjusted for unconsolidated Highland JV from 2011 - 2014
(2) Source: Bloomberg
FINANCIAL CRISIS CURRENT CYCLE
FINANCIAL CRISIS
Positioned to buy back approximately 50% of
outstanding common shares for about $240
million leading to outsized total shareholder
returns
CURRENT CYCLE
Ample flexibility to execute opportunistic growth
and maintain hedge against an economic
downturn
(1) (2)
9% 10% 9%
28%
75%
28%
22%
25% 25% 25%
28%
40%
47%
0%
10%
20%
30%
40%
50%
60%
70%
80%
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017
M
ill
io
n
s
Avg Cash Avg Equity Market Cap Cash / Equity Market Cap
Net Working Capital
12
(1) As of December 31, 2017, except as footnoted, in millions
(2) At market value as of 3/6/2018
Net Working Capital(1)
25-30%
CASH TO EQUITY MKT CAP
TARGET
48%
CURRENT CASH TO
EQUITY MKT CAP(2)
Ability to execute opportunistic
investments
BENEFITS
Hedge against economic uncertainty
One Ocean
Jacksonville, FL
$3.93
NWC / SHARE
Cash & Cash Equivalents $354.7
Restricted Cash 117.0
Investment in Securities 26.9
Accounts Receivable, net 44.4
Prepaid Expenses 19.3
Due From Affiliates, net (16.3)
Due from Third Party Hotel Managers 15.0
Market Value of Ashford, Inc. Investment(2) 56.8
Total Current Assets $617.8
Accounts Payable, net & Accrued Expenses $132.9
Div idends Payable 25.0
Total Current Liabilities $157.9
Net Working Capital $459.9
Non-Recourse Debt
13
(1) As of 3/6/2018
(2) As of December 31, 2017
(3) Includes Investment in Ashford Inc. at market value as of 3/6/2018
Total Enterprise Value
100%
NON-RECOURSE DEBT
100%
PROPERTY LEVEL,
MORTGAGE DEBT
0%
CORPORATE LEVEL DEBT
Non-recourse debt
lowers risk profile of
the platform
BENEFITS
Maximizes flexibility
in all economic
environments
Long-standing lender
relationships
High lender interest in
our high quality hotel
assets
Churchill
Washington D.C.
(2)
Stock Price $6.36
Fully Diluted Shares Outstanding 117.0
Equity Value $744.2
Plus: Preferred Equity 564.7
Plus: Debt 3,721.5
Total Market Capitalization $5,030.5
Less: Net Working Capital (459.9)
Total Enterprise Value $4,570.6
(1)
(2)
(2)
,(3)
(2)
The Churchill
Washington, D.C.
Value Enhancement through Refinancing
14
INDIGO ATLANTA – MAY 2017
5.98% L+2.90%
Old Interest Rate New Interest Rate
~$0.5mm in annual debt service
savings
BOSTON BACK BAY – OCT 2017
~$2.8mm in annual debt service
savings
17-PACK – OCT 2017
L+5.52%
Old Interest Rate
~$9.8mm in annual debt
service savings
L+3.00%
New Interest Rate
8-HOTEL PORTFOLIO – JAN 2018
L+4.95%
Old Interest Rate
L+2.92%
New Interest Rate
~$6.8mm in annual debt service savings
W Atlanta Downtown
Atlanta, GA
4.38% L+2.00%
Old Interest Rate New Interest Rate
STRATEGIC RATIONALE
Extend maturity
Greater flexibility
Interest expense savings ~ $20mm
Debt Yield:
10.8%
Debt Yield:
12.8%
Debt Yield:
11.0%
Debt Yield:
13.6%
Debt Maturity(1),(2)
15
(1) As of December 31, 2017 assumes extension options are exercised
(2) Pro forma for January 2018 refinance of 8-hotel portfolio
Note: All debt yield statistics are based on EBITDA to principal
2018 NO DEBT MATURITIES
5.5% TOTAL PORTFOLIO WEIGHTED AVERAGE INTEREST RATE
$5.3
$95.2
$253.0
$533.0 $333.9
$971.7
$1,549.8
$0
$200
$400
$600
$800
$1,000
$1,200
$1,400
$1,600
$1,800
$2,000
2018 2019 2020 2021 Thereafter
M
ill
io
n
s
Fixed-Rate Floating-Rate
Highest Insider Ownership
16
REIT average includes: AHP, HT, APLE, CLDT, CHSP, RLJ, PEB, INN, HST, DRH, SHO, XHR, LHO, PK
REIT Source: Latest proxy.
(1) As of 3/6/2018
(2) Includes direct interests and interests of related parties
Most highly aligned management team among the
lodging REIT sector #1
$141M Total Dollar Value of Insider Ownership(1),(2)
18.9%
14.9%
7.6%
6.1%
3.6%
3.2%
2.5% 2.3% 2.0% 1.7% 1.6%
1.1% 0.8% 0.5% 0.4% 0.3%
0.00%
2.00%
4.00%
6.00%
8.00%
10.00%
12.00%
14.00%
16.00%
18.00%
20.00%
AHT AHP HT APLE CLDT REIT
Avg
CHSP RLJ PEB INN HST DRH SHO XHR LHO PK
(1),(2) (1),(2)
Attractive Dividend Yield
17
Source: Company filings and market data
(1) As of 3/6/2018
(2) Annualized based on most recent dividend announcement
(3) Includes: AHP, APLE, CLDT, PK, LHO, CHSP, HT, RLJ, XHR, DRH, PEB, HST, INN, SHO
Highest dividend yield in the industry(1)
7.5%
7.1% 7.1% 7.0%
6.8%
6.6% 6.5% 6.5%
6.1% 6.1%
5.5% 5.5%
5.0%
4.8%
4.5% 4.4%
1.5%
2.5%
3.5%
4.5%
5.5%
6.5%
7.5%
8.5%
AHT LHO APLE CLDT RLJ PK AHP HT CHSP REIT
Avg
INN XHR SHO DRH PEB HST
(2) (3) (2)
Value Creation Through Active Asset Management
18
PORTFOLIO HOTEL EBITDA FLOW-THROUGH
(1) FY2016
(2) Peers include DRH, HST, INN, LHO, CHSP, HT, SHO, RLJ, and PEB
Ashford management creates value in
both brand and non-brand managed
assets
Hotel EBITDA flow-through has
outperformed the peer average
W ATLANTA DOWNTOWN W MINNEAPOLIS FOSHAY LE MERIDIEN MINNEAPOLIS
Flow-Thru: 157%
First full year of ownership(1)
EBITDA Flow-Thru: 115%
First full year of ownership(1)
EBITDA Flow-Thru: 84%
First full year of ownership(1)
41.9%
49.8% 50.5%
-1.3%
31.5%
36.9%
-10.0%
0.0%
10.0%
20.0%
30.0%
40.0%
50.0%
60.0%
2017 3-Yr Avg 5-Yr Avg
AHT Peer Avg
(2)
Case Study – Aggressive Asset Management
19
237 keys, 9,000 sq. ft. of meeting
space
Close proximity to the downtown and
midtown demand generators:
Centennial Olympic Park, the Atlanta
Aquarium, and Mercedes Benz
Stadium
Replaced unprofitable restaurant
manager and re-positioned restaurant
New management of the on-premise
digital billboard
Renegotiated valet parking agreement
Eliminated operational loss at Bliss Spa
through restructuring
First full year of ownership EBITDA flow-
thru of 157%, and EBITDA growth of 27%
W Atlanta – Atlanta, GA
Hotel Overview
Implemented Strategies
Case Study – Conversion to Remington Managed
20
357 keys, 15,000 sq. ft. of meeting space
Ideally located off Interstate 880 at the
gateway to Silicon Valley.
Announced forward cap rate and EBITDA
multiple of 8.1% and 10.0x, respectively
Current cap rate and EBITDA multiple of 15.7%
and 5.7x, respectively (1)
Acquired for $50 million and Oct 2016 refi had
allocated loan amount of $61 million
Increased club room premium pricing
Increased corporate group room nights to
25% mid-week to ensure sell-outs and push
rate
Aggressively priced preferred rooms rates
25%-30% YOY
From TTM Pre-Takeover to TTM Post-
Takeover
Revenue increased 15.7%
RevPAR increased 21.8%
GOP margin increased 1,116 bps
EBITDA margin increased 916 bps
Marriott Fremont – Fremont, CA Hotel Overview
Implemented Strategies
(1) As of December 31, 2017
Asset Management Initiatives – Recently Completed
21
W Hotel Atlanta Downtown: Terminated existing restaurant management agreement and brought the
operation in-house with a projected annual positive GOP impact of almost $300,000.
Le Meridien Minneapolis: Worked with existing restaurant tenant to restructure and extend the lease
under more favorable terms. Fitness center expansion completed.
Residence Inn Tampa Downtown: Guestroom, lobby and exterior renovation completed.
Hilton Tampa Westshore: Guestroom (phase 1) and meeting space renovation completed.
Hilton Garden Inn Jacksonville: Completed guestroom renovation.
Marriott Omaha: Completed full rooms and public area renovation; extended franchise agreement with
Marriott.
Marriott Dallas DFW: Converted from brand to franchise managed (Remington). Comprehensive
ballroom and meeting space renovation completed. Also acquired the regional laundry operation.
Marriott Research Triangle and Embassy Suites Walnut Creek: Extended franchise agreement with
respective brands.
Note: list is representative of recently completed initiatives, but does not include all assets
Asset Management Initiatives – Upcoming
22
Renaissance Nashville: Partnered with developer on the adjacent $430 million Fifth & Broadway mixed use
development. Extensive lobby, meeting space, and restaurant upgrade.
Ritz-Carlton Atlanta Downtown: Extensive guestroom renovation scheduled for Q4 2018 and expansion of
Ritz-Carlton Club Lounge.
Residence Inn Jacksonville: Guestroom and public space renovation underway with estimated Q1 2018
completion.
Hyatt Regency Coral Gables: Guestroom renovation planned for Q3 2018; to be completed Q1 2019.
Renaissance Palm Springs: Restaurant, meeting space and public area renovations have been completed.
Guestrooms renovations expected to be completed in Q1 2018.
Residence Inn Orlando SeaWorld: Guestroom/corridor renovation to be completed in Q1 2018.
Embassy Suites Santa Clara: Guestroom, retail market, and fitness center relocation to be completed Q2
2018.
Marriott Research Triangle: Guestroom and corridor renovation including shower conversions expected
completion in Q1 2018. Lobby renovation to follow in Q1 2019.
Courtyard Crystal City: Guestroom renovations, expected completion Q1 2018.
Embassy Suites Orlando Airport: Guestrooms complete. Extensive atrium, restaurant, and public space
underway including implementation of a corner pantry, expected completion Q1 2018.
Note: list is representative of upcoming or undergoing capital expenditures, but does not include all assets
Valuation Opportunity
23
PRICE / 2018E AFFO / SHARE MULTIPLE(1),(2) TTM CAP RATE(1) TEV / 2018E EBITDA MULTIPLE(1),(2)
Discount to
average peer
trading cap
rate (bps)
VALUATION OPPORTUNITY
120
Discount to
average peer
trading AFFO
multiple
5.3x
Discount to
average peer
trading EBITDA
multiple
1.2x
Opportunity to capture significant
valuation upside relative to peers
(1) As of 3/6/2018
(2) Based on consensus estimates
11.0x 11.1x 11.1x
11.8x 11.9x
12.1x 12.2x
12.3x
13.0x 13.1x
14.3x
10.0x
10.5x
11.0x
11.5x
12.0x
12.5x
13.0x
13.5x
14.0x
14.5x
15.0x
4.6x
8.2x 8.3x
9.2x
9.8x 9.9x
11.0x 11.0x 11.3x
12.1x
12.9x
3.0x
5.0x
7.0x
9.0x
11.0x
13.0x
15.0x
8.8%
8.6%
8.1%
7.9%
7.7%
7.6% 7.6% 7.6%
6.9%
6.5%
6.4%
6.0%
6.5%
7.0%
7.5%
8.0%
8.5%
9.0%
Hilton Costa Mesa
Costa Mesa, CA
Key Takeaways
24
Opportunistic
platform focused
on upper upscale,
full-service hotels
Disciplined capital
management
Targets debt levels
of 55-60% net
debt/gross assets
Targets cash level
of 25-30% of total
equity market cap
Highest insider
ownership
Attractive
dividend yield
Value added
asset
management
Valuation
opportunity
Le Pavillon
New Orleans, LA
Ritz-Carlton,
Atlanta, GA
Embassy Suites,
Walnut Creek, CA
Hilton,
Parsippany, NJ
March 2018