Ashford Hospitality Trust Reports First Quarter Results DALLAS, May
4 /PRNewswire-FirstCall/ -- Ashford Hospitality Trust, Inc.
(NYSE:AHT), a hotel real estate investment trust focused
exclusively on the hospitality industry, today reported results for
the first quarter ended March 31, 2005. The reconciliation of
non-GAAP financial measures is included in the financial tables
accompanying this press release. HIGHLIGHTS - Completed and
announced investments reach $1.4 billion - RevPAR increases 12.5%
for core hotels not under renovation - Adjusted FFO increased 181%
to $6.8 million, or $0.16 per diluted share, when adjusting for a
one-time debt extinguishment charge - Reports Cash Available for
Distribution of $0.17 per share - Announced and paid first quarter
dividend of $0.16 per share - Announced agreement to acquire
30-hotel portfolio for $465 million Financial Results Total revenue
for the first quarter ended March 31, 2005, increased 153.5% to
$48,960,000 from $19,312,000 for the first quarter ended March 31,
2004. The Company reported net income of $63,000, or $0.00 per
diluted share, compared with $554,000, or $0.02 per diluted share,
in the prior-year period. Adjusted FFO increased 100.0% on a
per-share basis to $6,841,000, or $0.16 per diluted share, when
adjusting for a one-time loss on debt extinguishment, compared with
$2,435,000, or $0.08 per diluted share, for the first quarter of
2004. EBITDA, which represents Earnings before Interest, Income
Taxes, Depreciation, and Amortization, increased to $10,500,000
compared with $3,209,000 in the prior-year period. CAD, which
represents Cash Available for Distribution, equaled $6,938,000, or
$0.17 per diluted share. Monty Bennett, President and CEO,
commented, "The strong RevPAR gains for our hotels included in
continuing operations were led primarily by rate improvement.
Combined with our aggressive asset management and focus on cost
controls, this rate growth resulted in a 16.1% increase in proforma
hotel operating profit and a 171-basis point increase in profit
margin. Substantially all of our hotels not under renovation
delivered RevPAR improvement in the quarter with the growth equally
distributed among our full service and select service assets. Not
surprisingly, the greatest improvement was experienced by those
hotels we have owned for at least one year, further demonstrating
the significant value that we believe we can add to well-located
and under-managed assets. "We are very pleased with the over $275
million of investment activity completed in the quarter, and, more
importantly, our ability to match-fund these investments with
timely capital raises. By creating the flexibility in our capital
sourcing through the commitment with Security Capital Preferred
Growth Incorporated, managing availability of our credit facility
and arranging long-term, fixed-rate debt at very attractive
pricing, we were able to announce our largest deal to date -- the
30-hotel, $465 million portfolio from CNL Hotels & Resorts,
Inc. Although our diversified investment strategy is our greatest
strength, we believe our financing strategy has provided an
additional competitive advantage for us." Operating Results -
Direct Hotel Investments As of March 31, 2005, the Company had a
portfolio of direct hotel investments consisting of 55 properties,
47 of which are included in continuing operations. During the
quarter, 12 of our hotels were undergoing significant renovations.
The Company believes reporting its operating metrics on a pro forma
consolidated and not-under-renovation basis more accurately
reflects the operating improvement in its direct hotel portfolio.
Details of each category are provided in the tables attached to
this release. All Core Hotels (47 properties) RevPAR for the first
quarter of 2005 increased 8.9% over the same period in 2004 to
$71.75 from $65.91 due to a 6.7% increase in ADR to $105.25 and a
133-basis point increase in occupancy to 68.17%. Hotels Not Under
Renovation (35 properties) RevPAR for the first quarter of 2005
increased 12.5% over the same period in 2004 to $77.96 from $69.32
due to a 5.7% increase in ADR to $109.05 and a 432-basis point
increase in occupancy to 71.49%. Proforma Hotel Operating Profit
Total hotel operating profit for the three months ended March 31,
2005, increased 16.1% to $18,919,000 from $16,291,000 for the
quarter ended March 31, 2004. Total hotel operating profit margin
increased by 171-basis points. Operating Results-First Mortgage and
Mezzanine Investments As of March 31, 2005, the Company had an
$81.5 million mezzanine and first mortgage loan portfolio across 13
hotel properties. The loan portfolio weighted average interest rate
is 12.84%. Balance Sheet and Financing Transactions As of March 31,
2005, the Company had approximately $427.4 million of mortgage debt
outstanding at a weighted average interest rate of 5.62%. At March
31, 2005, the Company's net debt, defined as total debt less
unrestricted cash, to total enterprise value, defined as net debt
plus the market value of all common shares, preferred shares and
operating partnership units outstanding (other than units owned by
the REIT), was 44% based upon the Company's closing stock price of
$10.20. On January 20, 2005, the Company issued 10,350,000 shares
of common stock at $9.62 per share, including 1,350,000 shares sold
pursuant to an over- allotment option, for net proceeds after
expenses of approximately $94.3 million. Additionally, the Company
has an agreement in place pursuant to this offering to sell subject
to certain conditions an additional 2,070,000 shares of common
stock to Security Capital Preferred Growth Incorporated. On April
5, 2005 and May 4, 2005, the Company issued a total of 5,182,100
shares of common stock at $10.25 per share in a follow-on offering
and over- allotment option, resulting in net proceeds after
underwriting discounts and expenses of approximately $51.4 million.
First Quarter Investment Activity On January 19, 2005, the Company
sold the 56,000-square-foot office building located adjacent to its
Sheraton Bucks County hotel in suburban Philadelphia for
approximately $2.9 million net of closing costs. On February 8,
2005, the Company originated a mezzanine loan of $8.0 million with
an interest rate of 912.5 basis points over LIBOR, maturing
February 2007 with three one-year extension options. The loan is
secured by the 163-room Viceroy Santa Monica in Santa Monica, CA.
On March 16, 2005, the Company acquired a 21-hotel, 4,094-room
portfolio for total consideration of $250 million, which was
comprised of $35.0 million in cash, the issuance of $50.3 million
in operating partnership units priced at $10.07 per unit, and the
assumption of $164.7 million in debt. The purchase price equated to
an 8.8x trailing twelve-month EBITDA multiple, an EBITDA yield of
11.4% and a trailing twelve-month net operating income
capitalization rate of 9.5% on the entire 21-hotel portfolio based
on a trailing 12-month NOI of $23.7 million. The average cost of
the assumed debt was 7.1% following the repayment of an
approximately a $14.7 million mezzanine loan. On March 22, 2005,
the Company acquired the 157-room Hilton Santa Fe in Santa Fe, NM,
for $18.2 million in cash. Annualized revenue of this property is
approximately $7.7 million. The Company intends to invest $2.5
million in capital improvements to the property. Subsequent
Investment Activity On April 1, 2005, the Company completed the
sale of the 70-suite Best Western Dallas Telecom Area Suites in
Dallas, Texas, for $1.35 million in cash. On April 19, 2005 and
April 22, 2005, the Company completed the sales of the 196-room
Ramada Inn Hyannis Regency in Hyannis, Massachusetts, for $4.75
million in cash, and the 164-room Ramada Inn Warner Robins for
$1.53 million in cash. Acquired by Ashford in March 2005 as part of
a 21-hotel portfolio, the three hotels had been designated as
non-core properties along with five other hotels in this portfolio.
On April 18, 2005, the Company originated an $8 million, five-year
mezzanine loan on the 350-room Hyatt Regency Philadelphia at Penn's
Landing in Philadelphia, PA. The loan, which matures in April 2010,
bears interest at a fixed rate of 14% for the first year and
increases 100 basis points each year of the term until 18% in year
five. On April 26, 2005, the Company executed a definitive
agreement to acquire a 30-property, 4,328-room hotel portfolio from
CNL Hotels and Resorts for $465 million in cash. The purchase price
equates to a trailing twelve-month net operating income
capitalization rate of approximately 8.4% on the entire 30- hotel
portfolio. In connection with this transaction the company received
a financing commitment from Merrill Lynch Mortgage Lending, Inc.
for $370 million at a fixed interest rate of 5.32%. The Company
expects the acquisition to close in June 2005. Outlook Mr. Bennett
concluded, "Based on the active pace we have established to date in
the second quarter, we are very optimistic about the expected
contributions from further year-over-year improvement in RevPAR
from the renovated hotels and the attractive acquisition and loan
opportunities we continue to source. This embedded growth as well
as additional investments should enable us to consider additional
dividend growth during 2005. With an asset base approaching $1.4
billion once the acquisition of the CNL portfolio is closed in late
second quarter, we will have grown from a portfolio of six hotels
to one of the larger hotel REITs in less than two years. The growth
in our portfolio and the ability to meet the capital needs of hotel
owners at all levels of the capital structure has significantly
raised our profile within the industry. We expect to continue to
leverage this unique positioning to become the preferred source for
hotel capital in what remains a very competitive, yet
opportunity-filled, market." Investor Conference Call and Simulcast
Ashford Hospitality Trust, Inc. will conduct a conference call at
11:00 a.m. eastern time on May 5, 2005, to discuss the first
quarter results. The number to call for this interactive
teleconference is 913-981-5509. A seven- day replay of the
conference call will be available by dialing 719-457-0820 and
entering the confirmation number, 8104241. The Company will also
provide an online simulcast and rebroadcast of its first quarter
2004 earnings release conference call. The live broadcast of
Ashford's quarterly conference call will be available online at the
Company's website at http://www.ahtreit.com/ as well as
http://phx.corporate-/
ir.net/phoenix.zhtml?p=irol-eventDetails&c=147105&eventID=1051998
on May 5, 2005, beginning at 11:00 a.m. eastern time. The online
replay will follow shortly after the call and continue for
approximately one year. Both FFO and EBITDA are non-GAAP financial
measures within the meaning of the Securities and Exchange
Commission rules. 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. Neither FFO
nor 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 is it indicative of funds available
to fund our cash needs, including our ability to make cash
distributions. However, management believes both FFO and EBITDA to
be key 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. Ashford Hospitality
Trust is a self-administered real estate investment trust focused
on investing in the hospitality industry across all segments and at
all levels of the capital structure, including direct hotel
investments, first mortgages, mezzanine loans and sale-leaseback
transactions. Additional information can be found on the Company's
web site at http://www.ahtreit.com/ . 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. 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 forward-looking statements
include, but are not limited to, our business and investment
strategy, timing for closings, our understanding of our
competition, current market trends and opportunities, and projected
capital expenditures. Such statements are subject to numerous
assumptions and uncertainties, many of which are outside Ashford'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 the section entitled
"Risk Factors" in Ashford's Registration Statement on Form S-3,
(File Number 333-114283), and from time to time, in Ashford's other
filings with the Securities and Exchange Commission. 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. ASHFORD
HOSPITALITY TRUST, INC. CONSOLIDATED STATEMENTS OF OPERATIONS (In
Thousands, Except Share and Per Share Amounts) (Unaudited) Three
Months Three Months Ended Ended March 31, 2005 March 31, 2004
REVENUE Rooms $36,612 $15,461 Food and beverage 7,573 2,111 Other
1,889 576 Total hotel revenue 46,074 18,148 Interest income from
notes receivable 2,548 844 Asset management fees from related
parties 338 320 Total Revenue 48,960 19,312 EXPENSES Hotel
operating expenses Rooms 8,138 3,546 Food and beverage 5,666 1,538
Other direct 850 357 Indirect 14,051 6,386 Management fees,
including related parties 1,457 581 Total hotel expenses 30,162
12,408 Property taxes, insurance, and other 2,573 1,187
Depreciation and amortization 4,291 1,762 Corporate general and
administrative: Stock-based compensation 620 596 Other corporate
and administrative 2,680 1,912 Total Operating Expenses 40,326
17,865 OPERATING INCOME 8,634 1,447 Interest income 277 92 Interest
expense (4,024) (773) Amortization of loan costs (948) (90)
Write-off of loan costs (151) - Loss on debt extinguishment (2,257)
- INCOME BEFORE INCOME TAXES AND MINORITY INTEREST 1,531 676
Benefit from income taxes 242 - Minority interest (304) (122)
INCOME FROM CONTINUING OPERATIONS 1,469 554 Discontinued
Operations: Loss from discontinued operations (18) - Income taxes -
- Loss from discontinued operations, net (18) - NET INCOME 1,451
554 Preferred dividends 1,388 - NET INCOME AVAILABLE TO COMMON
SHAREHOLDERS $63 $554 Basic and Diluted: Income From Continuing
Operations Per Share Available To Common Shareholders $0.00 $0.02
Loss From Discontinued Operations Per Share $0.00 $0.00 Net Income
Per Share Available To Common Shareholders $0.00 $0.02 Weighted
Average Common Shares Outstanding 33,449,674 25,024,246 ASHFORD
HOSPITALITY TRUST, INC. CONSOLIDATED BALANCE SHEETS (In Thousands,
Except Share and Per Share Amounts) (Unaudited) March 31, December
31, 2005 2004 ASSETS Investment in hotel properties, net $656,508
$427,005 Cash and cash equivalents 41,435 47,109 Restricted cash
24,918 14,059 Accounts receivable, net of allowance of $70 and $61,
respectively 14,683 5,463 Inventories 1,257 612 Assets held for
sale 36,723 2,882 Notes receivable 81,494 79,661 Deferred costs,
net 11,123 9,390 Prepaid expenses 4,967 2,639 Other assets 5,181
6,677 Due from affiliates 591 448 Total assets $878,880 $595,945
LIABILITIES AND OWNERS' EQUITY Indebtedness $427,387 $300,754
Capital leases payable 789 313 Accounts payable 14,849 8,980
Accrued expenses 16,424 9,340 Other liabilities 15 90 Dividends
payable 9,008 6,141 Deferred income 408 401 Due to affiliates 3,233
1,907 Total liabilities 472,113 327,926 Commitments and
contingencies - - Minority interest 88,162 39,347 Preferred stock,
$0.01 par value: Series B Cumulative Convertible Redeemable
Preferred Stock, 993,049 issued and outstanding at March 31, 2005
and December 31, 2004 9,737 9,980 Preferred stock, $0.01 par value,
50,000,000 shares authorized: Series A Cumulative Preferred Stock,
2,300,000 issued and outstanding at March 31, 2005 and December 31,
2004 23 23 Common stock, $0.01 par value, 200,000,000 shares
authorized, 36,532,847 and 25,810,447 shares issued and outstanding
at March 31, 2005 and December 31, 2004, respectively 365 258
Additional paid-in capital 333,000 234,993 Unearned compensation
(7,101) (3,959) Accumulated other comprehensive income 1,540 554
Accumulated deficit (18,959) (13,177) Total owners' equity 308,868
218,692 Total liabilities and owners' equity $878,880 $595,945
ASHFORD HOSPITALITY TRUST, INC. KEY PERFORMANCE INDICATORS
(Unaudited) ALL HOTELS INCLUDED IN CONTINUING OPERATIONS: Three
Months Ended March 31, 2005 2004 Consolidated (Pro Forma): Room
revenues $53,897,526 $50,051,457 RevPar $71.75 $65.91 Occupancy
68.17% 66.84% ADR $105.25 $98.61 NOTE: The above pro forma table
includes the 47 hotel properties included in income from continuing
operations for the three months ended March 31, 2005 as if all such
hotels were owned as of the beginning of the periods presented. ALL
HOTELS INCLUDED IN CONTINUING OPERATIONS AND NOT UNDER RENOVATION:
Three Months Ended March 31, 2005 2004 Hotels Not Under Renovation
(Pro Forma): Room revenues $47,283,049 $42,504,676 RevPar $77.96
$69.32 Occupancy 71.49% 67.17% ADR $109.05 $103.20 NOTE: The above
pro forma table includes the 35 hotel properties included in income
from continuing operations that were not under renovation during
the three months ended March 31, 2005 as if all such hotels were
owned as of the beginning of the periods presented. Excluded hotels
under renovation are Sheraton Bucks County, Hampton Inn Terre
Haute, Hampton Inn Horse Cave, Hampton Inn Evansville, Residence
Inn Evansville, Fairfield Inn Evansville West, Fairfield Inn
Princeton, Courtyard Columbus Tipton Lakes, Courtyard Bloomington,
Hampton Inn Mall of Georgia, Hilton St. Petersburg Bayfront, and
Radisson Milford. ASHFORD HOSPITALITY TRUST, INC. FFO and Adjusted
FFO (In Thousands, Except Share And Per Share Amounts) (Unaudited)
Three Months Three Months Ended Ended March 31, 2005 March 31, 2004
Net income available to common shareholders $63 $554 Plus real
estate depreciation and amortization 4,222 1,759 Remove minority
interest 299 122 FFO available to common shareholders $4,584 $2,435
FFO per diluted share available to common shareholders $0.11 $0.08
Plus loss on debt extinguishment 2,257 - Adjusted FFO available to
common shareholders $6,841 $2,435 Adjusted FFO per diluted share
available to common shareholders $0.16 $0.08 Diluted weighted
average shares outstanding 41,865,016 30,868,256 ASHFORD
HOSPITALITY TRUST, INC. EBITDA (In Thousands) (Unaudited) Three
Months Three Months Ended Ended March 31, 2005 March 31, 2004 Net
income $1,451 $554 Add back: Interest income 277 92 Interest
expense and amortization of loan costs (4,972) (863) Minority
interest (299) (122) Depreciation and amortization from continuing
operations (4,291) (1,762) Depreciation and amortization from
discontinued operations (6) - Provision for income taxes 242 -
(9,049) (2,655) EBITDA $10,500 $3,209 NOTE: For the three months
ended March 31, 2005, EBITDA has not been adjusted to add back the
loss on debt extinguishment of approximately $2.3 million. ASHFORD
HOSPITALITY TRUST, INC. CASH AVAILABLE FOR DISTRIBUTION (In
Thousands, Except Per Share Amounts) (Unaudited) Three Months Ended
March 31, 2005 (per diluted share) Net income available to common
shareholders $63 Add back dividend on redeemable preferred stock
159 Total $222 Plus real estate depreciation and amortization 4,222
$0.10 Remove minority interest 299 0.01 Plus stock-based
compensation 620 0.01 Plus amortization of loan costs 948 0.02 Plus
write-off of loan costs 151 0.00 Plus loss on debt extinguishment
2,257 0.05 Less debt premium amortization to reduce interest
expense (75) (0.00) Less capital improvements reserve (1,706)
(0.04) CAD $6,938 $0.17 ASHFORD HOSPITALITY TRUST, INC. PRO FORMA
HOTEL OPERATING PROFIT (In Thousands) (Unaudited) Three Months
Three Months Ended Ended March 31, 2005 March 31, 2004 REVENUE
Rooms $53,898 $50,051 Food and beverage 13,428 11,567 Other 2,829
2,877 Total hotel revenue 70,155 64,495 EXPENSES Hotel operating
expenses Rooms 11,648 10,549 Food and beverage 9,989 8,787 Other
direct 1,257 1,398 Indirect 22,239 21,536 Management fees 2,205
2,189 Total hotel operating expenses 47,338 44,459 Property taxes,
insurance, and other 3,898 3,745 HOTEL OPERATING PROFIT $18,919
$16,291 NOTE: The above pro forma table assumes the 47 hotel
properties included in income from continuing operations for the
three months ended March 31, 2005 were owned as of the beginning of
the periods presented. For both periods presented, the above table
excludes the 8 hotel properties included in discontinued operations
for the three months ended March 31, 2005. Contact: David Kimichik
Tripp Sullivan Chief Financial Officer Corporate Communications,
Inc. (972) 490-9600 (615) 254-3376 DATASOURCE: Ashford Hospitality
Trust, Inc. CONTACT: David Kimichik, Chief Financial Officer of
Ashford Hospitality Trust, Inc., +1-972-490-9600; or Tripp Sullivan
of Corporate Communications, Inc., +1-615-254-3376 Web site:
http://www.ahtreit.com/
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