AHT Ashford Hospitality Trust Inc

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 8-K

CURRENT REPORT

PURSUANT TO SECTION 13 OR 15(d) OF THE

SECURITIES EXCHANGE ACT OF 1934

Date of Report (date of earliest event reported):  August 6, 2015

ASHFORD HOSPITALITY TRUST, INC.

(Exact name of registrant as specified in its charter)

Registrant’s telephone number, including area code (972) 490-9600

Check the appropriated box if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

o                        Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

o                        Soliciting material pursuant to Rule 14-a-12 under the Exchange Act (17 CFR 240.14a-12)

o                        Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

o                        Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

ITEM 2.02.  RESULTS OF OPERATIONS AND FINANCIAL CONDITION

On August 6, 2015, Ashford Hospitality Trust, Inc. (the “Company”) issued a press release announcing its financial results for the second quarter ended June 30, 2015.  A copy of the press release is attached hereto as Exhibit 99.1.

The information in this Form 8-K and Exhibits attached hereto shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, except as shall be expressly set forth by specific reference in such filing.

ITEM 9.01.  FINANCIAL STATEMENTS AND EXHIBITS

(d)                                 Exhibits

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SIGNATURE

Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

Dated:  August 6, 2015

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Exhibit 99.1

ASHFORD TRUST REPORTS SECOND QUARTER 2015 RESULTS

7.9% RevPAR Increase for All Hotels Not Under Renovation for the Second Quarter

Adjusted EBITDA Increased 24%

Adjusted Funds From Operations per Share Increased 26%

Announced Planned Sale of Select-Service Hotel Portfolio and Strategy Refinements

DALLAS, August 6, 2015 —Ashford Hospitality Trust, Inc. (NYSE: AHT) (“the Company” or “Ashford Trust”) today reported financial results and performance measures for the second quarter ended June 30, 2015.  The performance measurements for Occupancy, Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), and Hotel Operating Profit (or Hotel EBITDA) are pro forma assuming each of the hotel properties in the Company’s hotel portfolio as of June 30, 2015 were owned as of the beginning of each of the periods presented.  Unless otherwise stated, all reported results compare the second quarter ended June 30, 2015, with the second quarter ended June 30, 2014 (see discussion below).  The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.

STRATEGY REFINEMENTS

·                  The Company will focus on acquiring and owning upper upscale, full service hotels

·                  The Company is not planning nor expects any future platform spinoffs

·                  The Company will continue to target a net debt to gross assets ratio of 55% - 60%

·                  The Company will continue to target cash and cash equivalents at a level of 25% - 35% of its total equity market capitalization for the purposes of:

·                  property-level and corporate-level working capital needs

·                  as a hedge against a downturn in the economy or hotel fundamentals

·                  to be prepared to pursue accretive investments or stock buybacks as those opportunities arise

·                  The Company plans to continue working with the research analysts that follow the Company to update their models to reflect the approximately $1.0 billion of acquisitions that the Company has either closed on or announced year-to-date

·                  The Company plans to sell a portfolio of 23 select-service hotels with anticipated closing in the first quarter

FINANCIAL AND OPERATING HIGHLIGHTS

·                  The Company’s common stock is currently trading at a trailing 12-month NOI cap rate of approximately 8.4%, while similar assets to those in its portfolio are trading in the private market at an approximate average trailing 12-month NOI cap rate of 7.0%.  A 7.0% cap rate implies a share price for the Company’s common stock of $15.85

·                  The Company’s common stock is currently trading at an approximate 6.0% dividend yield

·                  RevPAR for all hotels increased 6.6% during the quarter

·                  RevPAR for all hotels not under renovation increased 7.9% during the quarter

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·                  Hotel EBITDA increased 8.8% for all hotels

·                  Hotel EBITDA Margin increased 114 basis points for all hotels not under renovation

·                  Adjusted EBITDA increased $24 million or 24%

·                  Adjusted funds from operations (AFFO) was $0.49 per diluted share for the quarter as compared with $0.39 from the prior-year quarter representing an increase of 26%

·                  Subsequent to quarter end, on July 7, 2015, the Company announced it had completed the conversion of the 260-room Beverly Hills Marriott, formerly the Crowne Plaza Beverly Hills, following an extensive $26.0 million renovation

·                  Subsequent to quarter end, on July 27, 2015, the Company distributed the remaining units and shares that it owned of Ashford Hospitality Prime, Inc. (NYSE: AHP) (“Ashford Prime”)  to its shareholders through a pro-rata, taxable dividend

·                  Capex invested in the quarter was $37.4 million

CAPITAL STRUCTURE

At June 30, 2015, the Company had total assets of $5.0 billion in continuing operations.  As of June 30, 2015, the Company had $3.7 billion of mortgage debt in continuing operations.  Ashford Trust’s total combined debt had a blended average interest rate of 4.96%.

On April 20, 2015, the Company announced it had closed a $25.1 million mortgage loan for the previously-closed acquisition of the Lakeway Resort & Spa in Austin, TX.  The loan is interest only and provides for a floating interest rate of LIBOR + 5.10%.

On June 11, 2015, the Company announced it had completed the acquisition of the 226-room Le Pavillon Hotel in New Orleans, LA for total consideration of $62.5 million ($277,000 per key).  Ashford Inc. provided $4.0 million of key money consideration for the acquisition.  On a forward 12-month basis, after adjusting for the key money, the purchase price represents an estimated cap rate of 7.8% on net operating income and an estimated 11.4x EBITDA multiple.  The Company also closed on a $43.75 million non-recourse mortgage loan to finance the acquisition.  The loan is interest only and provides for a floating interest rate of LIBOR + 5.10%.

On June 24, 2015, the Company announced it had signed a definitive agreement to acquire the 229-room W Minneapolis Hotel — The Foshay and the 60-room Le Meridien Chambers Minneapolis for $101.0 million ($349,000 per key) and will assume approximately $56.0 million of mortgage debt on the W Minneapolis Hotel.

Subsequent to quarter end, on July 1, 2015, the Company announced that it had closed on the acquisition of the 237-room W Atlanta Downtown hotel for total consideration of $56.8 million ($239,000 per key).  On a forward 12-month basis, the purchase price represents an estimated cap rate of 7.2% on net operating income and an estimated 11.6x EBITDA multiple.  The Company financed the property with a $40.5 million non-recourse mortgage loan.  The loan is interest only and provides for a floating interest rate of LIBOR + 5.10%.

Subsequent to quarter end, on July 27, 2015, the Company distributed the remaining units and shares that it owned of Ashford Prime to its shareholders through a pro-rata, taxable dividend.

PORTFOLIO REVPAR

As of June 30, 2015, the Ashford Trust Portfolio consisted of direct hotel investments with 127 properties classified in continuing operations.  During the second quarter of 2015, 114 of the Company’s hotels included in continuing operations were not under renovation.  The Company believes reporting its operating metrics for the hotels in continuing operations on a pro forma total basis (all 127 hotels) and pro forma not under renovation basis (114 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.

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·                  Pro forma RevPAR increased 6.6% to $122.46 for all hotels on a 5.5% increase in ADR and a 1.0% increase in occupancy

·                  Pro forma RevPAR increased 7.9% to $124.06 for hotels not under renovation on a 5.8% increase in ADR and a 2.0% increase in occupancy

HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS

The Company believes year-over-year Hotel EBITDA and 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 Hotel EBITDA and 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 Pro forma Hotel EBITDA and Pro forma Hotel EBITDA Margin.  The details of the quarterly calculations for the previous four quarters for the 127 hotels are provided in the table attached to this release.

PLANNED SALE OF SELECT-SERVICE HOTEL PORTFOLIO AND OTHER ANNOUNCEMENTS

On June 26, 2015, the Company announced the planned sale of a 23 hotel portfolio of select-service hotels, while also redefining its investment strategy going forward to focus predominantly on upper-upscale, full-service hotels.  After a full analysis of the potential strategies and in response to investor feedback, the Company has commenced the process to list for sale a portfolio of approximately 23 select-service hotels and will take an opportunistic approach to selling the remaining select-service hotels in the future.

The for-sale, 23 select-service hotel portfolio totals 4,308 rooms, is encumbered by approximately $190.0 million of long term fixed rate debt and approximately $187.0 million of maturing or floating rate debt for total debt of approximately $377.0 million.  The current trailing 12-month NOI for the portfolio is approximately $44.2 million, and the trailing 12-month RevPAR for the portfolio is approximately $89.  It is anticipated that the sale will be completed in the first quarter of 2016 and the proceeds will be redeployed into assets that are consistent with the Company’s refined strategy of investing predominately in upper upscale, full-service hotels.

Additionally, the Company provided some financial and market metrics that are pertinent to the valuation of the platform as well as the disconnect between the current public market valuation of the Company and private market values.  The Company’s common stock is currently trading at a trailing 12-month NOI cap rate of approximately 8.4%.  Based on deals the Company has seen trade and other market information from industry consultants, the Company believes similar assets to those in its portfolio are trading in the private market at an approximate average trailing 12-month NOI cap rate of 7.0% which would imply a share price for Ashford Trust common stock of $15.85, which is approximately 91% higher than the current trading price of Ashford Trust common stock.

COMMON STOCK DIVIDEND

On June 15, 2015, 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 second quarter ending June 30, 2015, payable on July 15, 2015, to shareholders of record as of June 30, 2015.

“We posted another quarter of solid operating performance across the board, with strong growth in RevPAR, EBITDA and AFFO, underscoring the continued success of our revenue management initiatives,” commented Monty J. Bennett, Ashford Trust’s Chairman and Chief Executive Officer.  “As we announced in June, we have refined our investment strategy to focus predominantly on upper upscale, full-service hotels.  With the planned sale of a 23 select-service hotel portfolio and opportunistic sales of our remaining select-service properties in the future, we believe this more simplified and distinct strategy will drive superior long-term returns for our shareholders.”

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INVESTOR CONFERENCE CALL AND SIMULCAST

Ashford Hospitality Trust, Inc. will conduct a conference call on Friday, August 7, 2015, at 11:00 a.m. ET.  The number to call for this interactive teleconference is (719) 325-2308.  A replay of the conference call will be available through Friday, August 14, 2015, by dialing (719) 457-0820 and entering the confirmation number, 8880718.

The Company will also provide an online simulcast and rebroadcast of its second quarter 2015 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, August 7, 2015, 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 Operating Profit.  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, AFFO, EBITDA, nor Hotel Operating Profit 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 Operating Profit 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.

Follow Chairman and CEO Monty Bennett on Twitter at www.twitter.com/MBennettAshford or @MBennettAshford.

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 implied share price for the Company’s common stock.  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; the degree and nature of our competition; and the satisfaction of conditions to, or the completion of, the proposed launch of Ashford Select.  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

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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.

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

RECONCILIATION OF NET INCOME (LOSS) TO EBITDA AND ADJUSTED EBITDA

(in thousands)

(unaudited)

(1)         Other income, primarily consisting of net realized gain/loss on marketable securities in both periods, is excluded from Adjusted EBITDA.

 ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

 RECONCILIATION OF NET INCOME (LOSS) TO FUNDS FROM OPERATIONS (“FFO”) AND ADJUSTED FFO

 (in thousands, except per share amounts)

 (unaudited)

(1)         Other income, primarily consisting of net realized gain/loss on marketable securities in both periods, is excluded from Adjusted FFO.

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ASHFORD HOSPITALITY TRUST, INC. AND SUBSIDIARIES

SUMMARY OF INDEBTEDNESS

JUNE 30, 2015

(dollars in thousands)

(unaudited)