DALLAS, Nov. 3, 2014 /PRNewswire/ -- Ashford
Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust") today
announced that it is mailing a letter to shareholders regarding the
efforts by a labor union which is seeking to call a special meeting
of Ashford Trust shareholders.
In the letter, the Company notes that its Board of Directors
does not believe the issues raised by the hotel union should be
addressed at a special meeting and the Company responds to
statements made by the union.
The full text of the letter follows:
Dear Fellow Shareholder,
The Ashford Hospitality Trust, Inc. (the "Company" or "Ashford
Trust") Board of Directors and management team are committed to
creating value for all Ashford Trust shareholders and continue to
take actions towards achieving that goal.
In Ashford Trust's 11 years as a public company, the Board and
management team have driven tremendous value creation, growing
Ashford Trust from a blind pool with a little more than
$200 million in cash to a leader
today in the hospitality industry, with more than $4 billion of assets. In addition to
significantly growing our assets over the past 11 years, we have
been able to provide very attractive returns to our
shareholders. Importantly, Ashford Trust has had one of
the highest total shareholder returns of all the hotel REITs that
have been public since our IPO in August of 2003, delivering total
shareholder returns of 215% compared to a peer average of
162%.
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Peer average includes: BEE, CHSP, CLDT, DRH, FCH, HST, HT,
INN, LHO, PEB, RLJ, SHO
Trailing Total Shareholder Returns as of 10/29/14
Source:
Bloomberg
Ashford Trust
(NYSE: AHT) Total Returns vs. Benchmarks
|
Total Returns as
of 10/29/2014
|
Ashford
|
Bloomberg Hotel
REIT Index
|
MSCI U.S. REIT
Index
|
DJ U.S. Real
Estate Index
|
S&P 500
Index
|
1-
Year
|
33.1%
|
26.5%
|
16.3%
|
15.6%
|
14.7%
|
3-Year
|
108.9%
|
79.0%
|
47.4%
|
44.6%
|
63.0%
|
5-Year
|
401.8%
|
157.9%
|
135.4%
|
125.3%
|
110.5%
|
Since IPO
(08/2003)
|
214.7%
|
136.7%
|
N/A
|
163.0%
|
145.5%
|
Throughout our history, the Board and management team of Ashford
Trust have taken steps to deliver significant value for all of our
shareholders. Today, the Ashford family of companies
includes:
- Ashford Trust: A publicly-traded REIT, with 116 hotels
and a market capitalization of $4.4
billion as of 10/30/14, focused on investing
opportunistically in the hospitality industry across all segments
and at all levels of the capital structure, primarily within the
United States.
- Ashford Prime: A publicly-traded, conservatively
capitalized REIT, with 10 hotels and a market capitalization of
$1.3 billion as of 10/30/14.
Spun-off from Ashford Trust in November of 2013, with a
well-defined investment strategy to only invest in high quality,
high-RevPAR hotels located in major gateway and resort markets,
Ashford Prime operates with a more conservative leverage profile
than Ashford Trust.
- Ashford Inc.: On February 27,
2014, the Board approved and announced the spin-off of
Ashford Trust's asset management business into a new, separate
publicly-traded C-Corp. Once the spin-off is complete, which
we expect to occur on November 12,
2014, Ashford Inc. will be well positioned for growth with
advisory agreements in place with two publicly traded REITs,
Ashford Trust and Ashford Prime, as well as the anticipated launch
of Ashford Investment Management, our securities investment
platform.
With Ashford Trust and Ashford Prime pursuing distinct
investment strategies, we believe both companies are well
positioned to capitalize on the attractive lodging industry
fundamentals we expect to continue for the next several years, and
that Ashford Inc. will benefit from their growth and
success.
As you may have seen, the union, which beneficially owns 765
shares of Ashford Trust stock, is seeking to call a special meeting
of Ashford Trust shareholders and has mailed solicitation forms to
obtain shareholders' written consent as part of its efforts.
This union is a labor organization that represents workers at
hotels and lodging establishments in the U.S. and Canada with a history of provoking corporate
boards and management in situations where the union is a nominal
shareholder. We believe that the hotel union's real interest
is to assert its influence into a labor dispute at one of Ashford
Trust's hotels in Alaska by
threatening to disrupt the value creating separation of Ashford
Inc.
We strongly believe that convening a special meeting is not
in the best interests of the Company or its shareholders at this
time due to the distraction to the attention and resources of the
Board and management at a pivotal time in the Company's
history. We take this position because we believe the
spin-off of Ashford Inc. will result in significant value creation
for our shareholders, and any delay in the timing of the spin-off
will impact our ability to capitalize on current opportunities,
which could result in the loss of enhanced value creating
opportunities. We urge all Ashford Trust shareholders not to
be misled by the hotel union's campaign.
As part of its campaign, we believe the union has put forth a
number of mischaracterizations and we are taking this opportunity
to respond so that our shareholders may be fully informed.
In regards to the union's letter to shareholders, they mention
three issues that I'd like to discuss briefly in this letter:
1) Shareholder rights at Ashford Inc., 2) The benefits of the
Remington mutual exclusivity agreement, and 3) The advisory
structure of Ashford Prime and Ashford Trust. Our detailed
response to those three issues is contained within this letter, but
here is a brief summary:
- Shareholder rights at Ashford Inc.: We are
committed to corporate governance policies and practices that are
in the best interest of the Company and all of our
shareholders. Over the past several weeks, we reached out to
shareholders about our existing corporate governance at Ashford
Trust as well as the proposed corporate governance at Ashford
Inc. In response to those discussions with shareholders, we
made several changes that we believe demonstrate our commitment to
strong corporate governance. Regarding the proposed corporate
governance of Ashford Inc., we believe it is important to protect
Ashford Inc. during its initial period as a newly public company
given its small size. Notwithstanding Ashford Inc.'s small
initial size, we have made some enhancements to Ashford Inc.'s
governance as well in response to our shareholders' feedback.
- The benefits of the Remington mutual exclusivity
agreement: Ashford Trust has been a public company for 11
years and during that time we have grown our asset base
significantly while also achieving one of the highest total
shareholder returns of any hotel REIT that has been public during
that same time period. A big factor in that performance has
been our relationship with Remington. Remington is our best
property manager in terms of revenue growth, RevPAR Index growth,
and EBITDA flow-through and we, along with many of our shareholders
who have enjoyed superior returns, view that relationship as a
significant competitive advantage.
- The advisory structure of Ashford Prime and Ashford
Trust: We believe that the advisory structure that we
have developed for Ashford Prime and Ashford Trust is
revolutionary. Not only are the fees based on market values
as opposed to gross book values, but the management team is highly
aligned with shareholders given our high insider ownership in both
platforms. Also, the advisor is a publicly traded company, so
if investors want to synthetically create an internally advised
structure they can buy shares in the REIT and the advisor.
Ashford Trust Maintains Strong Corporate
Governance Policies and Practices That Best Serve the Interests of
the Company and All our Shareholders
Ashford Trust is committed to maintaining corporate governance
policies and practices that best serve the interests of the Company
and our shareholders and are designed to promote value
creation.
Our Board is comprised of seven highly qualified directors, five
of whom are independent including the lead director, in a structure
that fully complies with Institutional Shareholder Service's
("ISS") guidelines. Additionally, we have a charter provision
and corporate governance policy that addresses potential
conflicts. Ashford Trust also has the highest insider
ownership of any hotel REIT.
We always welcome the opinions and perspectives of our
shareholders. In this regard we have recently met with and
spoken with many of our shareholders over the course of several
weeks seeking input from our shareholders on governance
matters. In response to those conversations, we determined to
further enhance our corporate governance policies and practices to
best serve the interests of the Company and shareholders directly
in response to our shareholders' feedback.
On October 27, 2014, the following
corporate governance enhancements for Ashford Trust were
unanimously approved by the Board of Directors and included as
amendments to the Company's bylaws:
- Providing for a majority voting standard in the election of
directors in uncontested elections, subject to approval of a
similar amendment to the Company's charter at the 2015 annual
shareholder meeting that is consistent with the proposal previously
approved by shareholders at the Company's 2014 annual shareholder
meeting;
- Permitting shareholders to amend the bylaws; and
- Reducing the threshold for shareholders to call a special
meeting from 50 percent to 35 percent of the outstanding common
stock, following the Company's 2015 annual shareholder
meeting.
In addition, following our conversations with Ashford Trust
shareholders, the Board unanimously approved plans for corporate
governance enhancements for Ashford Inc. that would be instituted
in connection with the previously announced spin-off. The
Board is committed to protecting the Ashford Inc. franchise and the
interests of all shareholders during its initial period as a newly
public company. Since Ashford Inc. will be a small cap
company post spin-off, the Board considered the likely volatility
in the trading of Ashford Inc. stock and the potential for large
share accumulations as it developed the company's corporate
governance structure. The recent enhancements to the Ashford
Inc. corporate governance structure include amendments to the
bylaws of Ashford Inc. providing shareholders the right to call a
special meeting. Additional enhancements include:
- Providing Ashford Inc. shareholders the opportunity to vote to
declassify the Board at Ashford Inc.'s first annual meeting;
- Permitting shareholders to vote to remove Ashford Inc.'s
directors up for annual election, if shareholders vote to
declassify the Board; and
- Providing Ashford Inc. shareholders the opportunity to provide
an advisory non-binding vote on executive compensation every three
years.
Lastly, post spin-off, we are confident the Board of Ashford
Inc., and management, will continue to solicit feedback from
shareholders on governance matters as Ashford Inc. executes on its
intended growth strategy.
Remington Agreement Creates Significant Value
and Will Drive Future Growth
The mutual exclusivity agreement with Remington has been in
place since Ashford Trust's IPO in 2003, and as I mentioned
earlier, Ashford Trust has grown its assets from a little over
$200 million in 2003 to over
$4 billion today. Clearly,
having this mutual exclusivity agreement has not impacted our
ability to grow the portfolio. Ashford Trust has property
management agreements in place with a number of property management
companies, including Remington.
Remington manages the largest number of our assets and provides
Ashford Trust with a number of competitive advantages across its
portfolio. Notably, Remington outperforms our other
property managers from a revenue growth, RevPAR index growth, and
EBITDA flow-through standpoint. The result has been
significant value creation for Ashford Trust shareholders, and we
believe this will continue to benefit Ashford Inc. shareholders and
shareholders of future platforms.
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Contrary to the union's assertions, the Company works with a
number of other property managers in addition to Remington.
Remington manages 77 of our 116 hotel properties, which equates to
approximately 60% of Ashford Trust's Hotel EBITDA, while other
third-party management companies manage the remaining 39 hotel
properties. In addition, the independent directors of the
Board have the ability not to engage Remington if they do not think
it is in the best interest of Ashford Trust's shareholders or if
another manager can perform the duties materially better. In
fact, our commitment to ensuring the best management of our
properties has resulted in multiple instances where the Board has
chosen not to engage Remington.
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Importantly, Ashford Trust's property management agreements with
Remington are terminable on sale with no penalty. Unlike
typical brand management agreements (i.e., with Marriott or Hilton,
etc.), the fact that the contract is terminable typically yields a
lower cap rate on sale, translating to a higher value for our
shareholders when we sell an asset.
We believe that the benefits of the Company's agreements with
Remington are reflected in our historical operating outperformance
versus our peers and our historical total shareholder return
outperformance, and we are confident that our relationship with
Remington will enable Ashford Trust, Ashford Inc., and future
platforms to continue to deliver significant value to
shareholders.
Advisory Agreement Positions All Ashford
Companies for Growth
We strongly believe that, regardless of whether a company is
internally or externally advised, the most important driver of
success and value creation is whether the management team is
aligned with shareholders. Ashford Trust and Ashford Prime
have the highest insider ownership of all the hotel REITs by a
large margin. This high insider ownership translates into
high alignment with our shareholders. So regardless of
whether Ashford Trust is internally or externally advised, your
management team is invested right alongside all of you.
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Some additional factors that set apart our advisory structure
from others include:
- Revolutionary fee structure incentivizes shareholder value
creation. The advisory agreement's base fee structure is
based on total market capitalization, which takes into account
stock value as opposed to gross asset value. There is also an
incentive fee that is based on total shareholder return
outperformance versus peers. This is completely different
from typical advisory agreements which have base fees that are
based on gross book values, which have the effect of incentivizing
the advisor to just grow the asset base without growing shareholder
value.
- The base fee is 0.70% of total market capitalization, which
is slightly below the historic peer average for General and
Administrative (G&A) expense. In establishing a fee
structure, the Board and management team spent significant time
analyzing other advisory agreements. After analyzing G&A
expenses as a percentage of total market capitalization at other
hotel REITs over the past eight years, the Board concluded that
this was a reasonable level at which to set the base fee
threshold.
- Termination fee incentivizes advisor to consider all options
to maximize value. By including a termination fee
in the agreement, the Board intends for the advisor to consider all
options to create value, including recommending a sale of the
company if it is in the best interest of shareholders. Most
advisory agreements do not include this provision. By
including the ability to terminate the advisory agreement on a
change of control, the advisor is highly aligned with shareholders
to pursue the best path for shareholder value creation.
- Importantly, and in contrast to most advisors, Ashford Inc.
will be a publicly traded company. Typically, advisors
are private companies that are owned by a few individuals. In
our case, Ashford Inc. will be a publicly-traded company so if
investors want to internalize management they can do so
synthetically by buying shares in the REIT and the advisor.
Ashford Prime Positioned for Success
The Board is confident that the separation of Ashford Prime into
a separate publicly-traded company created a business with a strong
portfolio of high-quality, high RevPAR hotels that is
well-positioned for success. When we spun-off Ashford Prime,
we expected it to be valued in the public markets at a higher
valuation multiple than Ashford Trust given its higher RevPAR
hotels and lower leverage strategy. Post spin-off that is
exactly what happened. In fact, Ashford Prime was initially
valued at an EBITDA multiple that was 2-3 turns higher than Ashford
Trust's EBITDA multiple.
Soon after the spin-off, Ashford Prime completed an equity raise
to buy two hotels, the Pier House Resort and the Sofitel
Chicago. That equity raise increased the float of Ashford
Prime by 60%. After the equity raise, we continued to see
some Ashford Trust stockholders that did not want to own the
Ashford Prime strategy sell out of their Ashford Prime stock and
given that the large equity raise had soaked up much of the buying
demand, the stock continued to underperform.
Recently, the Board of Ashford Prime announced a $100 million share repurchase program and a plan
to sell one hotel in its portfolio to fund the repurchase
plan. We are committed to delivering enhanced shareholder
value at Ashford Prime and believe the sale of this hotel, and the
share repurchase plan, should result in significant value creation
for Ashford Prime shareholders.
A Shareholder Meeting will Result in a
Significant Delay of the Spin-Off and Potential Loss of Shareholder
Value
If we have to delay the spin-off of Ashford Inc., we could
potentially miss out on value creating opportunities that we cannot
pursue while Ashford Inc. is a subsidiary of Ashford Trust.
We encourage shareholders not to be misled by the efforts of the
union's campaign which is not aligned with the interests of all of
our shareholders. The hotel union is only interested in
unionizing hotels which would result in a significant increase in
operating costs and a significant loss of shareholder value.
The Board does not believe that the issues raised by the union
should be addressed at a special meeting. If you have already
submitted a written request card to the union supporting the
calling of a special meeting, you can revoke such request.
Please contact MacKenzie Partners, Inc. toll-free at 1-800-322-2885
or 212-929-5500 or e-mail proxy@mackenziepartners.com if you have
any questions or need assistance in revoking any request you may
have previously submitted to the union.
Regardless of the number of shares of common stock of the
Company that you own, your views are important. On behalf of
your Board of Directors and management team, we thank you for your
continued support.
Sincerely,
Monty J. Bennett
Chairman & Chief Executive Officer
Ashford Hospitality Trust is a real estate investment trust
(REIT) focused on investing opportunistically in the
hospitality industry across all segments and at all levels of the
capital structure primarily within the
United States.
Important Additional Information:
Ashford, its
directors and certain of its officers and employees are
participants in solicitations of Ashford stockholders. Information
regarding the names of Ashford's directors and executive officers
and their respective interests in Ashford by security holdings or
otherwise is set forth in Ashford's preliminary revocation
statement on Schedule 14A filed with the U.S. Securities and
Exchange Commission (the "SEC") on October
31, 2014, the Company's proxy statement for its 2014 annual
meeting of stockholders, filed with the SEC on April 14, 2014, as supplemented by the proxy
information filed with the SEC on May 5,
2014. Additional information can be found in Ashford's
Annual Report on Form 10-K for the year ended December 31, 2013, filed with the SEC on
March 3, 2014, its Quarterly Report
on Form 10-Q for the quarter ended March 31,
2014, filed with the SEC on May 12,
2014 and its Quarterly Report on Form 10-Q for the quarter
ended June 30, 2014, filed with the
SEC on August 11, 2014. To the extent
holdings of Ashford's securities have changed since the amounts
printed in the proxy statement for the 2014 annual meeting of
stockholders, such changes have been reflected on Initial
Statements of Beneficial Ownership on Form 3 or Statements of
Change in Ownership on Form 4 filed with the SEC. These documents
are available free of charge at the SEC's website at
www.sec.gov.
This communication does not constitute an offer to buy or
solicitation of an offer to sell any securities. This communication
is not a substitute for any proxy statement, solicitation
statement, registration statement, prospectus or other document
Ashford may file with the SEC. STOCKHOLDERS ARE ENCOURAGED TO
READ ANY ASFHORD PROXY STATEMENT, SOLICITATION STATEMENT (INCLUDING
ANY SUPPLEMENTS THERETO) AND ANY OTHER RELEVANT DOCUMENTS THAT
ASHFORD MAY FILE WITH THE SEC CAREFULLY AND IN THEIR ENTIRETY
BECAUSE THEY WILL CONTAIN IMPORTANT INFORMATION. Stockholders will
be able to obtain, free of charge, copies of any solicitation
statement and any other documents filed by Ashford with the SEC at
the SEC's website at www.sec.gov. In addition, copies will also be
available at no charge at the Investors section of Ashford's
website at www.ahtreit.com.
Forward-Looking Statements
This press release
contains "forward-looking statements" within the meaning of the
"safe harbor" provisions of the Private Securities Litigation
Reform Act of 1995. These forward-looking statements are made as of
the date they were first issued and are based on current
expectations as well as the beliefs and assumptions of management.
Forward-looking statements are subject to a number of risks and
uncertainties, many of which involve factors or circumstances that
are beyond Ashford's control. Ashford expressly disclaims any
intent or obligation to update these forward-looking statements
except as required by law. Additional information concerning these
and other risks can be found in press releases issued by Ashford,
as well as Ashford's public filings with the SEC, including the
discussion under the heading "Risk Factors" in Ashford's most
recent Annual Report on Form 10-K and any subsequent Quarterly
Reports on Form 10-Q. Copies of Ashford's press releases and
filings with the SEC, are available at www.ahtreit.com or you can
contact the Ashford Investor Relations Department at
972-778-9487.
SOURCE Ashford Hospitality Trust, Inc.