Ashford Hospitality Trust Inc · NYSE:AHT
Ashford Hospitality Trust — Investor Day (October 2015)
62 slides from Ashford Hospitality Trust's investor day presentation, Oct 20, 2015
Slide 1: Investor & Analyst Day – October 2015
Investor & Analyst Day – October 2015
Slide 2: Safe Harbor
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," "m
Slide 3: Management Team Attending
3 Management Team Attending Monty J. Bennett Chairman & Chief Executive Officer Ashford/Predecessor Experience: 26 yrs Douglas A. Kessler President Ashford/Predecessor Experience: 13 yrs Jeremy J. Welter EVP – Asset Management Ashford/Remington Experience: 10 yrs David A. Brooks Chief Operating Offi
Slide 4: Investor Day Timeline
4 Investor Day Timeline Vision Monty J. Bennett, Chairman & Chief Executive Officer Strategy Execution Douglas A. Kessler, President Asset Management Jeremy J. Welter, EVP – Asset Management Balance Sheet Overview Deric S. Eubanks, Chief Financial Officer Speaker Subject Time 9:05 am – 9:20 am 9:20
Slide 5: Ashford on Mobile & Social Media
5 Ashford on Mobile & Social Media Follow Chairman and Chief Executive Officer, Monty J. Bennett, on Twitter at www.twitter.com/MBennettAshford or @MBennettAshford The Ashford App is now available for free download at Apple's App Store and Google Play Store by searching "Ashford”
Slide 6: Vision – Monty Bennett, Chairman & CEO
Vision – Monty Bennett, Chairman & CEO W Atlanta Downtown Atlanta, GA
Slide 7: Ashford Hospitality Trust Vision
Ashford Hospitality Trust Vision Opportunistic platform focused on full-service hotels 7 Management team more highly-aligned with shareholders than our peers Appropriate use of financial leverage Best in class hotel managers Superior long-term total shareholder return performance Announc
Slide 8: Recent Developments
Recent Developments 8 Planned sale of 24-pack of select-service assets Simplify strategy 24 hotels and 4,410 rooms Encumbered by approximately $384 million of total debt TTM NOI and RevPAR of approximately $45 million and $88, respectively(1) Amendments to Advisory Agreement with Ashford
Slide 9: Relative Trading EBITDA Multiple vs. YTD 2015 RevPAR
Relative Trading 9 EBITDA Multiple vs. YTD 2015 RevPAR (as of 10/13/2015) *Based on consensus 2016 EBITDA estimates Source: Thomson, SNL & company filings 6.0x 8.0x 10.0x 12.0x 14.0x 16.0x 18.0x $75.00 $100.00 $125.00 $150.00 $175.00 $200.00 $225.00 $250.00 2016E EBITDA Multiple * YTD 2015 RevPAR PE
Slide 10: Strategy to Improve Shareholder Value
Strategy to Improve Shareholder Value 10 Current Market Valuation Increase in transparency No more spin-offs Improve portfolio quality through sale of select- service assets Private Market Valuation Simplify strategy and structure Opportunistic stock buybacks
Slide 11: Best In Class Hotel Managers
Best In Class Hotel Managers 88 properties managed by Remington representing 60% of portfolio hotel EBITDA 32 properties managed by Marriott representing 30% of portfolio hotel EBITDA Remaining 10 properties managed by Hilton, Starwood, Hyatt, and Interstate Best in class hotel property mana
Slide 12: Remington Outperformance - Revenue
Remington Outperformance - Revenue Affiliation with Remington is a competitive advantage 12 100 110 120 130 140 150 160 2009 2010 2011 2012 2013 2014 TTM 2015 Remington Non-Remington NOTE: Remington managed hotels owned by Ashford Trust and Ashford Prime as compared to Non-Remington managed hotels
Slide 13: Remington Outperformance - Profitability
52% 58% 59% 43% 41% 45% 22% 53% 60% 59% 68% 70% 47% 54% -200% -175% -150% -125% -100% -75% -50% -25% 0% 25% 50% 75% 100% 2008 2009 2010 2011 2012 2013 2014 TTM 2015 Non-Remington Remington Remington Outperformance - Profitability Remington has outperformed in EBITDA flow-through 7 out of the last
Slide 14: Demonstrated Long-Term Track Record
103% 18% -13% -19% 138% 89% 50% 118% 59% 23% 1% 141% 94% 47% 64% 538% 271% 46% 79% 64% -2% -16% -100% 0% 100% 200% 300% 400% 500% 600% Inception 10-Yr 9-Yr 8-Yr 7-Yr 6-Yr 5-Yr 4-Yr 3-Yr 2-Yr 1-Yr Peer Avg AHT Demonstrated Long-Term Track Record 14 (1) Since IPO on August 26, 2003 Peer average includ
Slide 15: Asset Performance
Asset Performance 15 Source: Company filings 2014 RevPAR Growth YTD Q2 2015 RevPAR Growth 11.6% 10.9% 10.5% 9.8% 8.8% 8.0% 7.2% 6.8% 6.1% 5.9% 5.3% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 10.1% 9.6% 7.3% 7.0% 6.8% 6.7% 6.2% 5.8% 5.1% 4.7% 4.4% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0%
Slide 16: Highest Insider Ownership
Highest Insider Ownership 16 16%* 5% 4% 3% 3% 2% 2% 2% 2% 1% 1% 1% 1% 1% 0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% AHT HT INN RLJ FCH CLDT Peer Avg CHSP HST PEB DRH BEE SHO LHO Public Lodging REITs include: BEE, CHSP, CLDT, DRH, FCH, HST, HT, INN, LHO, PEB, RLJ, SHO Source: Company fili
Slide 17: Shareholder Alignment
17 Shareholder Alignment Peers Ashford Trust Incentivized to grow No sizeable share repurchases Low insider ownership Reluctance to monetize Internal Incentivized to outperform Significant share repurchases High insider ownership Willingness to monetize External or internal His
Slide 18: Attractive Dividend Yield
Attractive Dividend Yield 18 Source: Company filings. 7.0% 6.6% 5.2% 5.0% 4.9% 4.7% 4.7% 4.6% 4.3% 4.2% 3.7% 3.7% 2.9% 2.7% 1.7% 1.4% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% AHT APLE LHO XHR HST CLDT RLJ CHSP HT Peer Avg DRH INN PEB AHP FCH SHO BEE Dividend Yield (as of 10/13/15) Highest divi
Slide 19: PKF RevPAR Growth Forecasts
PKF RevPAR Growth Forecasts 19 PKF RevPAR Growth 5.4% 8.2% 6.8% 5.4% 8.3% 7.2% 6.3% 5.5% 0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% 2010 2011 2012 2013 2014 2015F 2016F 2017F Historical RevPAR Growth Forecased RevPAR Growth Source: PKF
Slide 20: Future Potential Growth
Future Potential Growth 20 COMPOUNDED 2-YEAR REVPAR GROWTH RATE 24.3% 5.0% 5.5% 6.0% 6.5% 7.0% 20.0% 8.2% 9.0% 9.9% 10.7% 11.6% 25.0% 10.3% 11.3% 12.4% 13.4% 14.5% 30.0% 12.3% 13.6% 14.8% 16.1% 17.4% 35.0% 14.4% 15.8% 17.3% 18.8% 20.3% 40.0% 16.4% 18.1% 19.8% 21.5% 23.2% 45.0% 18.5% 20.3% 22.2% 24.2
Slide 21: Key Takeaways
Key Takeaways 21 Focused on increasing shareholder value through: Improving portfolio quality No more spin-offs Increase in transparency Simplify strategy and structure Attractive industry fundamentals Strong management team with a long track record of creating shareholder value High
Slide 22: Strategy Execution – Douglas Kessler, President
Strategy Execution – Douglas Kessler, President Le Pavillon Hotel New Orleans, LA
Slide 23: Long-Term Track Record of Execution
Long-Term Track Record of Execution Expertise 23 Transaction History Track record of disciplined, opportunistic single asset and portfolio transactions Purchased 197 hotels representing over $7 billion in value Sold 64 hotels representing approximately $1.8 billion in value Bought back appro
Slide 24: Ashford Trust Hotels: High Quality, Geographically Diverse Portfolio
24 Ashford Trust Hotels High Quality, Geographically Diverse Portfolio Le Pavillon Hotel New Orleans, LA Lakeway Resort & Spa Austin, TX Hilton Costa Mesa Costa Mesa, CA Marriott Fremont Fremont, CA Le Meridien Minneapolis Minneapolis, MN Chicago Silversmith Chicago, IL Hilton Back Bay Boston, MA Th
Slide 25: Portfolio Overview
TTM Hotel % of EBITDA Total Washington DC Area $45,065 9.9% NY/NJ Metro Area $31,402 6.9% Los Angeles Metro Area $28,983 6.4% San Fran/Oakland, CA $28,949 6.4% Atlanta, GA $27,495 6.0% Boston, MA $25,206 5.5% DFW, TX $24,753 5.4% Orlando, FL $19,868 4.4% Houston, TX $15,038 3.3% Miami Metro Area $11
Slide 26: Planned Select-Service Sale Update
Planned Select-Service Sale Update Planned select-service hotel sale overview: 24 hotels 4,410 rooms Encumbered by approximately $190 million of long-term fixed rate debt and approximately $194 million of maturing or floating rate debt TTM NOI(1) of approximately $45 million TTM RevPAR(1
Slide 27: Pro Forma Portfolio Figures
27 (1) Pro forma for announced sale of 24 select-service hotels (2) Pro forma for sale of all select-service hotels excluding Hilton Garden Inn Austin, Courtyard Boston Downtown, Hampton Inn Parsippany, Courtyard Crystal City, Courtyard Basking Ridge, Courtyard Newark, and Residence Inn Newark (3) A
Slide 28: Investment Strategy
Investment Strategy 28 Full-service hotels Upper-upscale hotels Focus on all markets Appropriate use of leverage Focus on franchised properties where we can add significant value Investment Strategy Competitive Advantage Increased deal flow Less competition Improves selectivity Mor
Slide 29: Recent Acquisitions
Recent Acquisitions 29 Strategic Rationale Total Value Forward Cap Rate(1) Forward Leveraged Cash Flow Yield (2) JV Share of Highland Portfolio 100% ownership in high quality portfolio $490.3 mn 7.4% 15% Le Pavillon, New Orleans Significant value-add opportunity; excellent location in a strong marke
Slide 30: Asset Management – Jeremy Welter, EVP
Asset Management – Jeremy Welter, EVP Marriott Fremont Fremont, CA
Slide 31: Asset Management Overview
Asset Management Overview 31 Strong Operational Performance Prudent Capital Investment Ownership Value Add
Slide 32: Strong Operational Performance
Strong Operational Performance 32 Strong Operational Performance Exceptional track record of significantly improving revenue and profitability following acquisition Strategic relationship with Remington aligns manager with owner and ensures rapid response to changing market conditions Consiste
Slide 33: Case Study – Remington Revenue Initiatives
Case Study – Remington Revenue Initiatives 33 Ashford-owned, Remington-managed assets gained 216 bps in 2014 RevPAR Index Group Retail Pricing Guidelines Increased Staffing Catering Revenues Big Data Initiative Aggressive Marketing Goals Centralized Lead Development
Slide 34: Case Study – Conversion to Remington Managed
Case Study – Conversion to Remington Managed 34 Implemented Strategies: Increased club room premium pricing from $30 to $45 Increased corporate group room nights to 25% mid-week to ensure sell- outs and push rate Improved pattern management and business mix to increase higher rated retail cont
Slide 35: Case Study – Ritz-Carlton Atlanta
Case Study – Ritz-Carlton Atlanta 35 Ashford Asset Management: Acquired asset in early 2011 as part of 28- property Highland portfolio Extraordinary revenue improvement since Ashford takeover Frequent sales meetings with property Achieved all-time peak 139.2 RevPAR index in Aug 2015 – Increa
Slide 36: Prudent Capital Investment
Prudent Capital Investment 36 Prudent Capital Investment Typically spend 10% less than peers on CapEx while strategically repositioning assets and generating superior operating results 12.8% 11.1% 8.4% 7.4% 6.9% 8.8% 10.6% 9.8% 0.0% 4.0% 8.0% 12.0% 16.0% 20.0% 2007 2008 2009 2010 2011 2012 2013 20
Slide 37: Case Study – Marriott Beverly Hills Conversion
Case Study – Marriott Beverly Hills Conversion 37
Slide 38: Case Study – Marriott Beverly Hills Conversion (cont.)
38 Case Study – Marriott Beverly Hills Conversion (cont.) Ashford identified underrepresentation of full-service Marriott product in the Beverly Hills market Closest Marriott full-service hotel is 6.6 miles away Full-service
Slide 39: Case Study – Marriott Beverly Hills Conversion (cont.)
39 Case Study – Marriott Beverly Hills Conversion (cont.) Renovation Management Terms $21mm (net of Marriott key money) Remington 25 year agreement with fee ramp, area of protection and key money Conversion (258 Rooms) Premium Pricing Average incremental increase in BAR of $48 since conversi
Slide 40: Case Study – Marriott Beverly Hills Conversion
40 Case Study – Marriott Beverly Hills Conversion Lobby Bar Restaurant Front Desk Lobby
Slide 41: Case Study – Marriott Beverly Hills Conversion (cont.)
41 Case Study – Marriott Beverly Hills Conversion (cont.) Guestroom Boardroom Guestroom Club Lounge
Slide 42: Case Study – Marriott Beverly Hills Conversion (cont.)
42 Case Study – Marriott Beverly Hills Conversion (cont.) Entrance Pool Fitness Center Outdoor Dining
Slide 43: Case Study – The Silversmith Renovation
Case Study – The Silversmith Renovation 43
Slide 44: Case Study – The Silversmith Renovation (cont.)
44 Case Study – The Silversmith Renovation (cont.) Ashford and JV partner invested $11mm ($77k per key) to reposition Significant RevPAR Growth: $112 $138 $70 $90 $110 $130 $150 1 2 TTM Pre- Repositioning TTM Post- Repositioning RevPAR growth of +23% YoY YTD 8/15 RevPAR +25.9% RPI +11.4% Total Reven
Slide 45: Case Study – The Silversmith Renovation (cont.)
45 Before After Lobby Lobby Restaurant / Bar Restaurant / Bar Case Study – The Silversmith Renovation (cont.)
Slide 46: Case Study – The Silversmith Renovation (cont.)
46 Case Study – The Silversmith Renovation (cont.) Before After Guestroom Guestroom Board Room Board Room
Slide 47: Opportunity – Marriott Crystal Gateway
Opportunity – Marriott Crystal Gateway 47 Repositioning of lobby to add M Club, Greatroom concept in 2015 Move restaurant from 2nd to 1st floor bar area, activating lobby and restaurant Build out meeting space on 2nd floor to replace restaurant Extensive 2016 guestroom renovation Crystal Gat
Slide 48: Ownership Value Add
Ownership Value Add 48 Ownership Value Add Continuously look to acquire or extend ground leases to improve asset valuations Proactively extend management and franchise agreements, targeting all assets with less than 5 years of remaining term, significantly limiting risk of losing flag Constant
Slide 49: Case Study – Lease Acquisitions & Extensions
Case Study – Lease Acquisitions & Extensions 49 Marriott Fremont – Fremont, CA Marriott San Antonio – San Antonio, TX Renaissance Nashville – Nashville, TN Acquired fee simple interest in hotel for minimal consideration Negotiated long-term lease on additional space 30,000 sf of meeting space and
Slide 50: Case Study – Lease Acquisitions & Extensions (cont.)
Case Study – Lease Acquisitions & Extensions (cont.) 50 Marriott Fremont – Fremont, CA Successfully extended parking garage ground lease with the City of Ft. Worth for an additional 40 years Renegotiated ground lease payment structure resulting in estimated annual savings of ~$200,000 Transaction
Slide 51: Opportunity – Renaissance Nashville
Opportunity – Renaissance Nashville 51 673-room hotel adjoining the Nashville Convention Center (NCC) in the heart of downtown Nashville Partnered with City of Nashville and third-party to redevelop NCC into a mixed-use development featuring retail, residential, office, dining and entertainment
Slide 52: Opportunity – Renaissance Nashville (cont.)
Opportunity – Renaissance Nashville (cont.) 52 Nashville Convention Center redevelopment renderings* *Source: Oliver McMillan
Slide 53: Opportunity – W Atlanta Downtown
Opportunity – W Atlanta Downtown 53 Acquired in July 2015 237 keys, 9,000 sq. ft. of meeting space Located in the heart of Downtown Atlanta Close proximity to the downtown and midtown demand generators: Centennial Olympic Park, the Atlanta Aquarium, and Georgia Dome Potential to reconcept
Slide 54: Opportunity – Le Pavillon
Opportunity – Le Pavillon 54 Le Pavillon – New Orleans, LA Le Pavillon – New Orleans, LA Acquired in June 2015 226 keys, 11,235 sq. ft. of meeting space Located in the heart of New Orleans Surrounded by corporate, group, and leisure demand generators Close proximity to The Mercedes-Benz Su
Slide 55: Asset Management Overview (cont.)
Asset Management Overview (cont.) 55 Exceptional Guest Service Risk Management & Property Taxes Energy Cost Management Preventive Maintenance Increased Ashford Trust portfolio scores 860 bps for the YTD period since implementing GSS recognition strategies Risk Management – Reduced General Liabil
Slide 56: Balance Sheet – Deric Eubanks, CFO
Balance Sheet – Deric Eubanks, CFO One Ocean Resort Atlantic Beach, FL
Slide 57: Capital Structure
Capital Structure Appropriate use of leverage to more cost effectively invest in the hotel cycle Current net working capital of approximately $3.35 per share All debt is non-recourse, property level mortgage debt 57 As of June 30, 2015 (1) Adjusted for acquisition of W Atlanta Downtown, Le Mer
Slide 58: Target Cash Balance and Net Working Capital
Target Cash Balance and Net Working Capital Targeted cash balance of 25% to 30% of market capitalization Maintain excess cash balance to capitalize on opportunities Hedge unfavorable economic shocks Dry powder to execute opportunistic acquisitions Exclusive use of non-recourse, property le
Slide 59: Debt Maturities and Leverage
$91.7 $178.8 $484.4 $207.1 $328.9 $569.4 $1,787.4 $17.0 $176.0 $146.7 $182.2 $48.3 $241.2 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 2015 2016 2017 2018 2019 Thereafter Fixed-Rate Floating-Rate Expected / Hypothetical Excess Proceeds Debt Maturities and Leverage Target Net Debt/Gross Asset
Slide 60: Upcoming Refinancings
Upcoming Refinancings Proactively refinance upcoming maturities Current refinancing opportunities: UBS 2 Loan Pool • 8 properties • 1,076 keys • Broken into 2 pools: Full-Service and Select-Service • New total loan amount of approximately $109 million • Approximately $17 million in excess proc
Slide 61: Ashford Trust Q&A
Ashford Trust Q&A The Churchill Washington D.C.
Slide 62: Investor & Analyst Day – October 2015
Investor & Analyst Day – October 2015
Ashford Hospitality Trust — Investor Day (October 2015) on 6ix