Ashford Hospitality Trust Inc · NYSE:AHT
Ashford Hospitality Trust — Investor Day (October 2017)
61 slides from Ashford Hospitality Trust's investor day presentation, Oct 3, 2017
Slide 1: Investor and Analyst Day October 3, 2017 New York
Investor and Analyst Day October 3, 2017 New York
Slide 2: Forward Looking Statements and Non-GAAP Measures
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 projecte
Slide 3: Management Team
Management Team 3 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 17 years of hospitality experience 14 years with Ashford 3 years with ClubCorp CFA charterholde
Slide 4: Ashford App and Social Media
Ashford App and Social Media 4 Follow Ashford Inc. Chairman and Chief Executive Officer, Monty J. Bennett, on Twitter at www.twitter.com/MBennettAshford or @MBennettAshford The Ashford App is available for free download at Apple's App Store and Google Play Store by searching "Ashford”
Slide 5: Q&A email questions
Q&A 5 email questions to: questions@ashfordinc.com
Slide 6: Five Guiding Principles
Five Guiding Principles 6 ENGAGING ETHICAL INNOVATIVE PROFITABLE TENACIOUS
Slide 7: Portfolio / Recent Activity – Douglas A. Kessler, CEO & President
Portfolio / Recent Activity – Douglas A. Kessler, CEO & President Hyatt Savannah Savannah, GA
Slide 8: Portfolio Overview
Portfolio Overview 8 (1) As of June 30, 2017 (2) TTM as of June 30, 2017 for the 120 owned hotels as of September 27, 2017 (3) Hotel EBITDA in thousands 120 Hotels 25,000 Rooms $5.7B Gross Assets(1) 31 States TOP TEN METRO AREAS(2),(3) PORTFOLIO BY HOTEL EBITDA(2) Brand Property Manager MSA Chainsca
Slide 9: Geographically Diverse
9 <1% Geographically Diverse Washington D.C. – 9.9% Los Angeles – 7.3% San Francisco – 7.4% New York – 6.5% Boston – 5.7% Nashville – 5.7% Atlanta – 5.7% Dallas / Ft. Worth – 5.4% Minneapolis – 3.6% Tampa – 2.6% Houston – 2.4% Miami – 2.4% Orlando – 2.1% San Diego – 1.5% Philadelphia – 1.7% Portland
Slide 10: High Quality
High Quality 10 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 Cora
Slide 11: Recent Activity
Recent Activity 11 Equity Incentive Plan • Requires stock ownership by directors and officers • Requires minimum vesting periods Stock Ownership • Increased the required share ownership for directors from 3x to 4x By-Laws • Reduced outstanding shares to call a special meeting to 30% Investor Feedbac
Slide 12: Vision – Douglas A. Kessler, CEO & President
Vision – Douglas A. Kessler, CEO & President W Atlanta Downtown Atlanta, GA
Slide 13: Overview
Overview 13 Opportunistic platform focused on upper upscale, full-service hotels Highest insider ownership Disciplined capital management Aligned advisory structure Targets debt levels of 55-60% net debt/gross assets Attractive dividend yield Targets cash level of 25-30% of total equity market cap S
Slide 14: Full-Service Rationale
Full-Service Rationale 14 170 BPS ATTRACTIVE SUPPLY FUNDAMENTALS 1.4% 2.0% 3.1% 3.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 10-YR 2018E Upper-Upscale Other Chainscales LOWER 150 BPS LOWER FAVORABLE ACQUISITION YIELDS 6.5% Low End 8.5% High End Management Estimates VALUE-ADD OPPORTUNITIES 39% F
Slide 15: Disciplined Capital Management
$218 $170 $305 $574 $72 $90 $147 $89 $112 $18 $97 $81 $45 $52 $68 $65 $400 $76 $112 $17 $275 $95 $200 $10 $11 $73 $116 $90 $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 Raise
Slide 16: Leverage Target
Leverage Target 16 Appropriate use of leverage contributed to outsized long-term total shareholder returns relative to peers 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 N
Slide 17: Cash Target
9% 10% 9% 28% 75% 28% 22% 25% 25% 25% 28% 40% 45% 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 Cash Target 17 (1) YTD June 2017 (2)
Slide 18: Highest Insider Ownership
19.2% 15.9% 7.6% 6.1% 3.6% 3.3% 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 Highest Insider Ownership 18 REIT average includes: AHP, HT, APLE, CLDT, CHS
Slide 19: Advisory Agreement Structure
Advisory Agreement Structure 19 (1) Amended Advisory Agreement in June 2015 ADVISOR MANAGED REIT Fees Provide asset management, advisory services & key money SUMMARY TERMS(1) BASE FEE INCENTIVE FEE INCENTIVE FEE PAYMENT OTHER FEES TERM EXTENSIONS • 70 bps of Total Market Capitalization (TMC) • Payab
Slide 20: Attractive Dividend Yield
7.2% 6.7% 6.4% 6.3% 6.2% 6.1% 6.0% 6.0% 5.9% 5.5% 5.2% 4.6% 4.3% 4.2% 4.2% 4.2% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% AHT AHP APLE PK CLDT LHO HT RLJ CHSP REIT Avg XHR DRH HST PEB INN SHO Attractive Dividend Yield 20 Source: Company filings and market data (1) As of 9/27/2017 (2) Annualized based
Slide 21: Superior Total Shareholder Returns
152% -5% 22% 208% 98% 47% 86% 56% 27% -8% 22% 1% 202% 82% 191% 1,497% 296% 90% 120% 59% 29% -8% 33% -11% -100% 0% 100% 200% 300% 400% 500% 600% 700% 800% 900% Inception 10-Yr 9-Yr 8-Yr 7-Yr 6-Yr 5-Yr 4-Yr 3-Yr 2-Yr 1-Yr YTD 2017 Peer Avg AHT Superior Total Shareholder Returns 21 (1) Since IPO on Aug
Slide 22: Strategy Execution – Douglas A. Kessler, CEO & President
Strategy Execution – Douglas A. Kessler, CEO & President Le Meridien Minneapolis Minneapolis, MN
Slide 23: Acquisition Process
Acquisition Process 23 5 4 3 Evaluate Financial Metrics Closing Further Due Diligence • Transaction Review Meetings • Asset Management Evaluation • Remington Analysis • Unleveraged IRR vs. WACC • Leverage Neutral IRR • TTM Cap Rate • FTM Cap Rate • $/Key vs. Replacement Cost • Preliminary Capital Pl
Slide 24: Rationale for Selling Assets
Rationale for Selling Assets 24 R E A SON S T O S EL L Execute strategic goals Unlock maximum value Generate cash proceeds Recycle capital Improve portfolio quality Capex Supply / demand shifts Opportunity costs Accretive to shareholders
Slide 25: Select-Service Portfolio
Select-Service Portfolio 25 DISPOSITION SUMMARY $218M TOTAL VALUE SOLD 9 Evaluated Alternatives (1) TTM as of June 30, 2017 (2) GAAP reconciliation in appendix REMAINING SELECT-SERVICE OVERVIEW 61 HOTELS SOLD REMAINING HOTELS $106 REVPAR(1) $147M HOTEL EBITDA(1),(2) Courtyard Boston Tremont Boston,
Slide 26: Key Value Drivers
Key Value Drivers 26 DIVERSIFIED PORTFOLIO AVAILABLE CASH DEAL FLOW DIVIDEND • Reduces risk • Increases investment opportunities and recycling • Active market • Higher yields • Unencumbered management • Less competition • Hedge against economic uncertainty • Purchasing power • Attractive dividend yi
Slide 27: Key Value Drivers (cont.)
Key Value Drivers (cont.) 27 CAPITAL EXPERTISE PROVEN ASSET MANAGEMENT NON-BRAND MANAGED ASSETS VALUE-ADD CAPEX • Opportunistic refinancing • Disciplined and proactive execution • Competitive advantage with affiliated property manager Remington • Outperformance track record • 9 projects • $115 milli
Slide 28: Key Value Drivers (cont.)
Key Value Drivers (cont.) 28 SELECT-SERVICE PORTFOLIO LONG-TERM TRACK RECORD • Demonstrated long-term track record of outperformance vs peers • Opportunity to unlock value The Silversmith Chicago, IL The Churchill Washington, DC
Slide 29: Valuation Opportunity
Valuation Opportunity 29 (1) Based on average from 2014 to YTD June 2017 (2) Peer s include: RLJ, DRH, HST, SHO, LHO, CLDT, HT, INN, CHSP PRICE / 2018E AFFO / SHARE MULTIPLE(3),(4) TTM CAP RATE(3) TEV / 2018E EBITDA MULTIPLE(3),(4) Discount to average peer trading cap rate (bps) VALUATION OPPORTUNIT
Slide 30: Asset Management – Jeremy J. Welter, EVP
Asset Management – Jeremy J. Welter, EVP The Churchill Washington D.C.
Slide 31: What We Do
What We Do 31 • We optimize the performance, strategic positioning, and value of our hotels • Ashford’s Asset Management Group houses specialists across multiple disciplines • Deployment structure allows for more focused asset management Disciplines REVENUE OPTIMIZATION Bonus based on RevPAR index A
Slide 32: Asset Management Overview
Asset Management Overview 32 TEAM • 1 - EVP • 10 - Asset managers • 2 - Revenue optimization • 3 - Risk & Insurance • 4 - Capex specialists • 2 - Legal • 1 - Property tax specialist • 4 - Analysts MEETINGS WITH PROPERTY MANAGEMENT • Asset manager has a weekly meeting with hotel leadership ― Revenue
Slide 33: Asset Management Overview (cont.)
Asset Management Overview (cont.) 33 BRAND NEGOTIATIONS • Branding decisions, negotiations, and extensions • Brand related PIPs and capital directives • Asset management team members serve on brand owner advisory committees • Respond to all brand development proposals • Attend brand conferences and
Slide 34: Benefits of Advisory Structure
Benefits of Advisory Structure 34 Scale: benefits from having a 133-hotel portfolio, across which best practices can be shared and corporate overhead minimized Brand relationships: benefits by being a large owner of hotels with Marriott and Hilton Remington property management: ability to drive perf
Slide 35: Past Operating Performance Relative to Peers
Past Operating Performance Relative to Peers 35 RevPAR Growth 4.9% 3.4% 1.6% 2.2% 1.4% 0.5% Hotel EBITDA Growth 0.5% -0.5% 2016 Q2 3.4% 1.7% 2016 Q3 2016 Q4 2017 Q1 2017 Q2 7.3% 4.7% 1.0% 4.2% 1.6% -0.7% -0.6% -3.8% 4.2% 0.8% Peers: CHSP, CLDT, DRH, INN, LHO, RLJ, SHO, HST, HT • We have outperformed
Slide 36: Opportunity – Renaissance Nashville
Opportunity – Renaissance Nashville 36 • Nashville Convention Center (NCC) urban revitalization • 27.4% increase in meeting space, all fee simple • New retail (including H&M anchor), entertainment, and office space as well as direct access for hotel guests to Fifth + Broadway Today 61,000 TOTAL MEET
Slide 37: Opportunity – Renaissance Nashville (cont.)
Opportunity – Renaissance Nashville (cont.) 37 NCC Prior to Construction NCC Going Forward
Slide 38: Opportunity – Renaissance Nashville (cont.)
Opportunity – Renaissance Nashville (cont.) 38 Meeting Space Renderings
Slide 39: Case Study – Hyatt Regency Savannah
Case Study – Hyatt Regency Savannah 39 • Rooms and corridors renovation from October 2014 to April 2015 • Opportunity: Meeting area, lobby, front entrance, and restaurant repositioning renovation from November 2016 – July 2017 TTM APRIL 2016 (FIRST 12 MONTHS FOLLOWING ROOMS RENOVATION) *Renovation P
Slide 40: Case Study – Marriott Beverly Hills
Case Study – Marriott Beverly Hills 40 *Renovation period INCREMENTAL STATS(1) $81.72 ADR (1) Fully ramped Marriott vs. pre-renovation as a Crowne Plaza (TTM June 2017 vs. TTM June 2014) (2) 6.5% cap rate, conservatively assumes same cap rate for both a Marriott and Crowne Plaza $78.36 RevPAR 2,889b
Slide 41: Case Study – Marriott Beverly Hills (cont.)
41 Case Study – Marriott Beverly Hills (cont.) Lobby Bar Restaurant Front Desk Lobby
Slide 42: Case Study – Marriott Beverly Hills (cont.)
42 Case Study – Marriott Beverly Hills (cont.) Guest Bathroom Boardroom Guestroom Club Lounge Boardroo
Slide 43: Case Study – Marriott Fremont
$4.0 $6.5 $8.2 $8.9 54% 87% 82% 378% 50% 55% 60% 65% 70% 75% 80% 85% 90% 95% 100% $3 $4 $5 $6 $7 $8 $9 $10 TTM July 2014* TTM July 2015 TTM July 2016 TTM July 2017 M ill ion s Hotel EBITDA Hotel EBITDA Flow-Through Case Study – Marriott Fremont 43 KEY FINANCIALS *12 months prior to acquisition Pre-T
Slide 44: Opportunity – W Atlanta
Opportunity – W Atlanta 44 *Acquired July 2015 (1) As of June 30, 2017 OPPORTUNITIES Eliminated restaurant manager, who was operating at $250,000 loss Re-concept and reconfigure current restaurant space to include a market Better utilize vacated 2nd floor; turning into flexible meeting space Increas
Slide 45: Opportunity – Marriott Crystal Gateway
Opportunity – Marriott Crystal Gateway 45 YTD JUNE 2017 $20-$30 $31.6M $8.7M Hotel EBITDA (2rd in portfolio) Total Revenue (2nd in portfolio) Expected M Club Room Premium Renegotiated management agreement increased owner’s priority return by ~300 bps Significant Capital Upgrades to Guestrooms and Pu
Slide 46: Opportunity – Ritz Carlton Atlanta
Opportunity – Ritz Carlton Atlanta 46 INCREMENTAL STATS(1) +224% EBITDA Margin +1,893 bps RPI (1) Pre-acquisition under Highland ownership (2010) compared to Ashford ownership (TTM June 2017) Last guestroom renovation ACQUIRED IN 2011 AS PART OF 28-PROPERTY HIGHLAND PORTFOLIO NOV 2017 – SEP 2018 $18
Slide 47: Opportunity – Ritz Carlton Atlanta (cont.)
Opportunity – Ritz Carlton Atlanta (cont.) 47 BEFORE AFTER (MODEL ROOMS)
Slide 48: Case Study – Pure Rooms
Case Study – Pure Rooms 48 IRR 77% HYATT REGENCY SAVANNAH EMBASSY SUITES ORLANDO AIRPORT 122% 90% EMBASSY SUITES PORTLAND - DOWNTOWN TOTAL PORTFOLIO 96% • 3 Ashford Trust hotels have had PURE rooms for at least 1 year • 35 total PURE rooms across 3 hotels
Slide 49: Case Study – Portfolio RPI Growth
Case Study – Portfolio RPI Growth 49 • Trust has grown RPI in each of the last 3 years relative to its competitors and on pace to grow RPI for a 4th straight year Unprecedented RevPAR Index Growth RPI YoY % Change 2014 2015 2016 TTM July 2017 180bps 30bps 80bps 100bps Since 2013, 350 basis point mar
Slide 50: Case Study – Paid Self Parking Implementations
Case Study – Paid Self Parking Implementations 50 • We continue to rollout paid parking • Market leader in rate/near the top of our competitive sets • Constantly monitoring • Often 1st to move in a market • Embassy Suites Santa Clara converted to gated self parking beginning August 2017 Expected Ann
Slide 51: Case Study – Insurance
Case Study – Insurance(1) 51 (1) Includes property, earthquake/flood, pollution, crime, and general liability/umbrella insurance (2) Comparison of TTM insurance expenses at acquisition, grown at 3% annually, to TTM July 2017 insurance expenses (3) 14 hotels Post-Acquisition Savings(2) $167K W MINNEA
Slide 52: Balance Sheet – Deric S. Eubanks, CFO
Balance Sheet – Deric S. Eubanks, CFO Le Pavillon Hotel New Orleans, LA
Slide 53: Leverage Profile
Leverage Profile 53 55%-60% TARGET LEVERAGE Net Debt Gross Assets (1) As of June 30, 2017 Current leverage at 61%(1) OVERVIEW Appropriate use of leverage to maximize shareholder returns All floating rate debt has interest rate caps Leverage policy has been unchanged since IPO in 2003 Marriott Beverl
Slide 54: Non-Recourse Debt / Total Enterprise Value
Stock Price (As of September 27, 2017) $6.64 Fully Diluted Shares Outstanding 117.6 Equity Value $780.8 Plus: Preferred Equity 553.1 Plus: Debt 3,708.1 Total Market Capitalization $5,042.1 Less: Net Working Capital (517.6) Total Enterprise Value $4,524.5 Non-Recourse Debt 54 (1) As of June 30, 2017
Slide 55: Net Working Capital and Cash Target
Cash & Cash Equivalents $404.3 Restricted Cash 150.3 Investment in Securities 19.3 Accounts Receivable, net 56.7 Prepaid Expenses 24.1 Due From Affiliates, net (15.5) Due from Third Party Hotel Managers 16.9 Market Value of Ashford, Inc. Investment(2) 34.6 Total Current Assets $690.7 Accounts Payabl
Slide 56: Value Enhancement through Refinancing
Value Enhancement through Refinancing 56 (1) Assumes full funding of loan (2) Management estimates per non-binding term sheet INDIGO ATLANTA – MAY 2017 5.98% L+2.90% Old Interest Rate New Interest Rate Cash flow savings of ~$585,000 in annual debt service with no change in asset leverage NASHVILLE
Slide 57: Debt Maturity
$95 $5 $96 $255 $533 $711 $1,384 $631 $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 2017 2018 2019 2020 2021 Thereafter M ill io n s Fixed-Rate Floating-Rate Debt Maturity(1) 57 As of June 30, 2017 (1) Assumes extension options are exercised Note: All debt yield statistics are based on EBITDA t
Slide 58: Q&A
Q&A Hilton Costa Mesa Costa Mesa, CA
Slide 59: Appendix
Appendix Hilton Fort Worth Ft. Worth, TX
Slide 60: Reconciliation of Net Income (Loss) to Hotel EBITDA
Reconciliation of Net Income (Loss) to Hotel EBITDA 60 Full-Service Select-Service Full-Service Select-Service Full-Service Select-Service Full-Service Select-Service Full-Service Select-Service Net income (loss) 66,477$ 22,802$ 28,791$ 16,311$ 11,533$ 20,048$ 38,438$ 17,305$ 145,239$ 76,466$ (Incom
Slide 61: Investor and Analyst Day October 3, 2017 New York
Investor and Analyst Day October 3, 2017 New York
Ashford Hospitality Trust — Investor Day (October 2017) on 6ix