Ashford Hospitality Trust Inc · NYSE:AHT
Ashford Hospitality Trust — Investor Day (October 2018)
47 slides from Ashford Hospitality Trust's investor day presentation, Oct 2, 2018
Slide 1: Investor Day - October 2018
JAW ASHFORD HOSPITALITY TRUST Investor Day - October 2018
Slide 2: Forward Looking Statements and Non-GAAP Measures
Forward Looking Statements and Non-GAAP Measures 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.
Slide 3: Goals and Strategy
Goals OUTPERFORM Deliver strong shareholder returns vs. peers Strategy PROTECT Protect shareholder investment through disciplined capital Opportunistically own, management strategies finance, and asset manage predominately full–service, upper upscale hotels GROW Increase the quality and performance
Slide 4: Experienced Management Team
E x p e r i e n c e d M a n a g e m e n t T e a m J e r e m y W e l t e r D e r i c E u b a n k s D o u g l a s K e s s l e r J . R o b i s o n H a y s R o b e r t H a i m a n C h i e f O p e r a t i n g C h i e f F i n a n c i a l C h i e f E x e c u t i v e C h i e f S t r a t e g y E V P , G e n
Slide 5: Reasons to Own Ashford Hospitality Trust
Reasons to Own Ashford Hospitality Trust STRATEGIC FOCUS PORTFOLIO QUALITY ERFP PROGRAM CAPEX INVESTMENT Strategy maximizes investment High quality portfolio presents an Innovative program provides a Substantial CapEx investment positions opportunity and value-added returns attractive investment opp
Slide 6: Strategic Rationale Full-Service & Upper Upscale
Strategic Rationale Full-Service & Upper Upscale 2017 DEAL FLOW(1) Full-Service VALUE-ADD (Luxury) $ 2.5B 10% 39% OF TOTAL UPPER UPSCALE ROOMS ARE FRANCHISED(2) YIELD 6.5% - 8.5% ESTIMATED CAP RATES Full-Service (Non- Limited-Service Luxury) $ 10.5B $ 11.6B 43% 47% (1) Estimate based upon MAR, HLT,
Slide 7: High Quality Portfolio
High Quality PORTFOLIO W Atlanta Downtown Marriott Beverly Hills Crowne Plaza La Concha Le Pavillon Atlanta, GA Beverly Hills, CA Key West, FL New Orleans, LA One Ocean Le Meridien Minneapolis W Minneapolis The Silversmith Jacksonville, FL Minneapolis, MN Minneapolis, MN Chicago, IL Hyatt Coral Gabl
Slide 8: Key Metrics Portfolio Overview
K e y M e t r i c s Portfolio Overview 118 24,930 31 $125 $5.9B H O T E L S (1) H O T E L R O O M S (1) S T A T E S R e v P A R (1)(2) G R O S S A S S E T S Portfolio by Hotel EBITDA(1)(2) IHG INTERSTATE 2% HYAT T LUXURY MARRIOTT <1% 5% UPPER HYATT 4% REMINGTON 5% 56% SELECT-SERVICE MIDSCALE 59% 29%
Slide 9: Portfolio Position Geographically Diverse
Portfolio Position Geographically Diverse Portfolio by Hotel EBITDA(1)(2) INTERSTATE <1% OTHER RESORT 11% 8% 3% TOP 50 18% AIRPORT SMALL TOWN/ METRO 16% Location MSA’s TTM Q2 2018 Type (3) Top 10 Markets EBITDA % of Total Washington, DC $51,818 11.0% San Fran/Oakland, CA $35,568 7.6% TOP 25 Los Ange
Slide 10: Maximize Value Enhanced Return Funding Program
Maximize Value Enhanced Return Funding Program • $50M ERFP commitment • Initial 2 year term • Up to 10% of purchase price • Funding comes in form of purchased FF&E • Potential to enhance five year IRRs by $50M ERFP 700 to 1,200 basis points(1) for AHT hotel Allocation(2) acquisitions $100M AHT Equit
Slide 11: A Virtuous Cycle
A V I R T U O U S C Y C L E ERFP PROGRAM Enhances AHT Returns AHT continues to grow portfolio accretively Contributes to AHT competitive Potential ERFP accretive growth advantage Expansion purchasing assets ERFP Provides More ERFP Available Capital ERFP demonstrates a programmatic, sizable, and repe
Slide 12: Capital Improvements Contribute to Growth
Capital Improvements Contribute to Growth Hotel CapEx Invested 250,000 221,960 204,040 200,000 175,159 150,000 120,105 117,744 96,285 100,000 (In Thousands $) Thousands (In 50,000 0 2013 2014 2015 2016 2017 2018 Q2 YTD Strategic capital improvements better position hotels for performance 12
Slide 13: Best-in-Class Asset Management
Best- in- Class Asset Management Comparable Hotel EBITDA Margin 34.5% 34.0% 34.0% 33.5% 33.1% 32.9% 33.0% 32.7% 32.4% 32.5% 32.0% 32.1% 31.7% 32.0% 31.5% 31.1% 30.7% 30.7% 31.0% 30.5% 30.0% 29.6% 29.5% 2013 2014 2015 2016 2017 2018 Q2 YTD Peer Avg. (1) AHT EBITDA margins consistently increased durin
Slide 14: Disciplined Capital Management
Disciplined Capital Management COMMON SHARE BUYBACKS Track record of enhancing shareholder returns by capitalizing upon cyclical changes and 73.6M ~50% $3.28 advantageous pricing situations SHARES SHARES AVERAGE OUTSTANDING BUYBACK $1,400 PRICE Financial Crisis $1,200 $200 PREFERRED EQUITY ACTIVITY
Slide 15: Affiliate Competitive Advantages
Affiliate Competitive Advantages AFFILIATED COMPANIES PLATFORM To drive performance, guest satisfaction, and revenue To maximize outperformance vs. peers Mobile interface for guest check-in and room access Scale with major hotel brands Audio visual services for banquets, meetings, and events Long te
Slide 16: Highest Insider Ownership Among Peers
Highest INSIDER OWNERSHIP AMONG PEERS 20% 17.7% 18% 16% 14.3% 14% 12% 10% 9.4% 8% 6.3% 6% 3.4% 3.4% 4% 2.6% 2.2% 2.1% 1.9% 1.6% 2% 1.2% 0.9% 0.9% 0.4% 0.4% 0% AHT(1) BHR (1) HT APLE Peer CLDT CHSP PEB INN HST RLJ DRH SHO XHR LHO PK Avg. #1 5.2x $133M Aligned Management Team More insider ownership vs
Slide 17: Transactions
QA | ASHFORD HOSPITALITY TRUST Transac tions
Slide 18: Acquisition Utilizing ERFP Hilton Alexandria Old Town
Acquisition Utilizing ERFP Hilton Alexandria Old Town REDUCED I N C R E A S E D REDUCED I M P R O V E D A C Q U I S I T I O N G O I N G - I N E Q U I T Y S H A R E H O L D E R P R I C E C A P R A T E C O N T R I B U T I O N R E T U R N S Acquired hotel (252 rooms, Effective TTM NOI Cap Effectively r
Slide 19: Acquisition Utilizing ERFP Hilton Scotts Valley/Santa Cruz
Acquisition Utilizing ERFP Hilton Scotts Valley/Santa Cruz • Favorable RevPAR/yield combination Key Metrics with operational upside Acquisition Price $50M • Only Hilton full-service product in wide ERFP Contribution $5M market area Rooms 178 (1) • Opportunity to increase tech based and Price/key $25
Slide 20: Acquisition Utilizing ERFP La Posada de Santa Fe
Acquisition Utilizing ERFP La Posada de Santa Fe • Supply constrained market able to Key Metrics generate high RevPAR Acquisition Price $50M • Significant operational upside and ERFP Contribution $5M synergies with our nearby Hilton Rooms 157 (1) • Leisure driven resort market with year- Price/key $
Slide 21: Asset Sales Financially Calibrated
A s s e t S a l e s Financially Calibrated ASSETS SOLD SINCE 2015 SALE OF MAINLY SELECT-SERVICE HOTELS HAMPTON INN TERRE HAUTE $375M COURTYARD MARRIOTT VILLAGE LAKE BUENA VISTA SALES PROCEEDS SPRINGHILL SUITES LAKE BUENA VISTA FAIRFIELLD INN LAKE BUENA VISTA DISPOSING OF LOWER REVPAR HOTELS RESIDENN
Slide 22: Balance Sheet
WIN ASHFORD HOSPITALITY TRUST Balance Sheet
Slide 23: Well-Laddered Debt Maturity Schedule
Well- L a d d e r e d Debt Maturity Schedule (1) Q4 2017 weighted average maturity was 3.7 years Q2 2018 weighted average maturity is now 6.1 years $4,000 Less than 16% of debt due through $3,500 2022 $3,000 $2,500 $2,000 $3,108.1 Millions) in in $1,500 ($ ($ $1,000 $500 $5.3 $191.2 $287.3 $271.0 $0
Slide 24: Consistent Historical Leverage
Consistent Historical Leverage $6,000 70.0% 64.9% 63.8% 61.2% 61.9% 65.0% $5,000 59.6% 58.7% 59.1% 58.3% 58.5% 60.0% 56.1% 56.4% 55.5% 55.7% 55.0% $4,000 49.2% 50.0% 42.4% $3,000 45.0% ($ Millions) in ($ 40.0% $2,000 35.0% 30.0% $1,000 25.0% $0 20.0% 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013
Slide 25: Strategic Cash Target
Strategic Cash Target F i n a n c i a l C r i s i s C u r r e n t C y c l e Positioned to buy back approximately 50% of Flexibility to execute opportunistic outstanding common shares for about $240M growth and maintain hedge against an leading to outsized total shareholder returns economic downturn
Slide 26: Strategic Rationale Non-Recourse Debt
Strategic Rationale Non-Recourse Debt B e n e f i t s o f N o n - R e c o u r s e D e b t T o t a l E n t e r p r i s e V a l u e • Non-recourse debt lowers risk profile of Stock Price(1) $6.31 platform Fully Diluted Shares Outstanding(2) 119.2 • Maximizes flexibility in all economic Equity Value $7
Slide 27: Value Enhancement Through Recent Refinancings
V a l u e E n h a n c e m e n t T h r o u g h Recent Refinancings S t r a t e g i c R a t i o n a l e L+5.52% L+3.00% L+4.95% L+2.92% Extend Maturity 17- P a c k – O c t 2 0 1 7 8 - Pack – J a n 2 0 1 8 Greater Flexibility ~$9.8M in annual debt ~$6.8M in annual debt service savings over prior se
Slide 28: Asset Management Initiatives
Asset Management Initiatives
Slide 29: Overview Asset Management Team
Overview Asset Management Team Co-President & COO -1 Asset Managers - 10 400+ Years of Collective Hospitality Revenue Optimization - 3 Experience CapEx Specialists - 4 Risk & Insurance - 3 Legal - 3 140+ Years at Ashford Property Tax Specialist -1 Director of Analytics -1 13 Graduate Degrees Analyst
Slide 30: Relative to Peers RevPAR Performance
Relative to Peers RevPAR Performance R e v P A R % C h a n g e C u m u l a t i v e R e v P A R G r o w t h 24% 2014 2015 2016 2017 22% 930 bps 930 AHT 9.8% 6.5% 3.2% 1.8% 20% AHT 18% Peer Avg. 6.8% 4.0% 1.5% 0.8% Peer Avg. 16% 14% 12% 4 Straight Years of 10% 8% Outperformance 6% 4% 2014 2015 2016 20
Slide 31: Relative to Peers Hotel EBITDA Performance
Relative to Peers Hotel EBITDA Performance H o t e l E B I T D A % C h a n g e C u m u l a t i v e H o t e l E B I T D A G r o w t h 2014 2015 2016 2017 30% AHT 13.3% 9.0% 4.5% 1.0% bps 1060 AHT Peer Avg. 11.7% 6.1% 1.6% -0.4% 25% Peer Avg. 20% 4 Straight Years of 15% Outperformance 10% 2014 2015 20
Slide 32: Case Study The Melrose
C a s e S t u d y The Melrose 5 Consecutive Years of Positive RPI Growth $18 105 Total Revenue $17 RevPAR Index 100 $16 95 RevPAR Index 2580bps $15 90 $14 85 $13 80 $12 Revenue ($ Millions) in ($ Revenue $11 75 $10 70 2013 2014 2015 2016 2017 STRATEGY IMPLEMENTED • Redefined hotel brand utilizing co
Slide 33: Case Study Marriott DFW Franchise Conversion
C a s e S t u d y Marriott DFW Franchise Conversion 491 18,522 s q . f t . Keys Meeting Space IMMEDIATELY UNDER SIGNIFICANT RENOVATION Renovation included guestrooms, meeting space, public space, restaurant, concierge lounge, fitness center, and pool RESULTS – FIRST 12 MONTHS(1) Performance Occupanc
Slide 34: Case Study Courtyard Boston Downtown
C a s e S t u d y Courtyard Boston Downtown STRATEGY IMPLEMENTED • Increased premium room inventory • Increased and optimized digital marketing • Added sales resources • Closed disruptive night club to improve guest satisfaction • Expanded/enhanced retail market • $8.8M invested in the guestroom and
Slide 35: Case Study Hyatt Regency Savannah
C a s e S t u d y Hyatt Regency Savannah $ 1 0 . 7 M $ 8 . 4 M Invested in lobby, meeting space, and Invested in guestrooms and corridors restaurant $10 Renovation Period Performance Comparison Hotel EBITDA $9 RevPAR Index(3) $8 109.2 130.2 (3) (In Millions $) Millions (In $7 Value Added $6 (1) (1)
Slide 36: Case Study Marriott Beverly Hills Rebranding
C a s e S t u d y Marriott Beverly Hills Rebranding (1) O n l y f u l l - Incremental Value Added $ 1 1 . 0 M s e r v i c e M a r r i o t t Revenue: 5,950bps Occ: 950bps i n c r e m e n t a l w i t h i n 6 - m i l e ADR: 4,640bps RevPAR: $90.14 C a p E x r a d i u s Value Creation(2): $68.8M 130 $13
Slide 37: Case Study Key Additions
C a s e S t u d y Key Additions Asset Management Identifies Opportunities For Value-Add Key Additions TRACK RECORD OF ADDING KEYS Property(1) Keys ADR Hyatt Regency Coral Gables 11 $189 Sheraton City Center - Indianapolis 7 132 Marriott Crystal Gateway 4 189 Hilton Santa Fe 1 160 SpringHill Suites B
Slide 38: Opportunity Hilton St. Petersburg Bayfront Land Deal
Opportunity Hilton St. Petersburg Bayfront Land Deal Hotel • Developer to purchase the parking lot to develop a condominium and parking garage • Under contract for $17.5M in cash • Land under contract at above appraisal value • Developer to pay $40k/month in reimbursement for interim parking • Buyer
Slide 39: Case Study Marriott Group Pace
C a s e S t u d y Marriott Group Pace 5 Years of Positive Group Revenue Growth STRATEGY IMPLEMENTED YoY Group Year Revenue • Added hotel Director of Sales at key properties 2013 1.1% • Increased Corporate Sales support ratios 2014 8.7% • Sales Transformation Advisory 2015 11.2% Council participant •
Slide 40: Opportunity Project Alpha
Opportunity Project Alpha Implementing aggressive strategy to increase ancillary revenue by making sure that our fees are competitive with the market $2.2M $3.7M $400K $4.6M Resort Fee Parking Early Arrival/ Other Charge Late Departure Total Added Revenue(1): $10.9M (1) Estimated annual revenue 40
Slide 41: Opportunity Proprietary Business Analytics Tool
Opportunity Proprietary Business Analytics Tool Revenue Outlook Next 6-Months 12-Aug 19-Aug 26-Aug 2-Sep Outlook Hotel Manager AM WoW Chg. Pace WoW Chg. Pace WoW Chg. Pace WoW Chg. Pace WoW Chg. Pace Ahead, Gaining Renaissance Nashville Marriott Liz Lloyd $ 959 $ 1,004,766 $ (2,845) $ 8,908 $ 9,758
Slide 42: Portfolio Value Added From RPI Growth
Portfolio Value Added From RPI Growth AHT has grown RPI in each of the last 4 years, which has resulted in massive gains to the portfolio’s value 2014 2015 $106.2M $46.2M 2016 2017 $33.9M $48.1M Cumulative Value Added(1) $234.4M 42 (1) Based on 7.5% cap rate
Slide 43: Valuation
WIN ASHFORD HOSPITALITY TRUST Valuation
Slide 44: Valuation
Valuation (1),(2) 9.0% TTM CAP RATE 8.5% 8.3% 8.1% 8.0% 7.7% 7.5% 7.1% 6.9% 6.9% 7.0% 6.7% 6.5% 6.2% 6.0% 6.0% 6.0% 5.7% 5.5% 5.0% 4.5% 4.0% AHT CLDT RLJ DRH INN SHO Peer Avg CHSP HST LHO HT TEV / 2018E EBITDA MULTIPLE(1),(2) 16.0x 15.5x 15.3x 15.0x 13.9x 14.0x 13.3x 13.4x 13.4x 13.0x 12.4x 12.5x 12
Slide 45: Attractive Dividend Yield
Attractive Dividend Yield (1) 8.5% 7.6% 7.5% 7.0% 6.4% 6.5% 6.0% 5.7% 5.5% 5.4% 5.5% 5.0% 4.9% 4.9% 4.7% 4.5% 4.5% 4.3% 4.2% 4.0% 3.5% 2.6% 2.5% 1.5% AHT APLE CLDT RLJ PK BHR INN Peer CHSP HT XHR SHO DRH PEB HST (2) LHO Avg. Source: Bloomberg (1) As of September 26, 2018, annualized based on most re
Slide 46: Reasons to Own Ashford Hospitality Trust
STRATEGIC FOCUS PORTFOLIO QUALITY ERFP PROGRAM CAPEX INVESTMENT Reasons to Own Ashford Hospitality Trust ASSET MANAGEMENT TRACK RECORD AFFILIATE ADVANTAGES INSIDER OWNERSHIP
Slide 47: Investor Day - October 2018
JAW ASHFORD HOSPITALITY TRUST Investor Day - October 2018
Ashford Hospitality Trust — Investor Day (October 2018) on 6ix