Ashford Hospitality Trust Inc · NYSE:AHT
Ashford Hospitality Trust — Merger or Acquisition (August 2013)
24 slides from Ashford Hospitality Trust's merger presentation, Aug 29, 2013
Slide 1: Ashford Hospitality Prime Spin-Off Overview
NS ASHFORD HOSPITALITY PRIME Spin-Off Overview
Slide 2: Safe Harbor
2 Safe Harbor 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
Slide 3: Ashford Hospitality Prime Spin-Off
3 Ashford Hospitality Prime Spin-Off • AHT plans to contribute ownership interests in an 8-hotel portfolio to a newly formed company, Ashford Hospitality Prime, Inc. ("Ashford Prime"), which is expected to qualify as a Real Estate Investment Trust and intends to file an application to list its share
Slide 4: Strategic Rationale
4 Strategic Rationale Creation of Two Focused Companies Creates Clarity Potential for Higher Aggregate Market Value for Stockholders Tailored Capital Structure More Efficient More Conservative Capital Structure
Slide 5: Transaction Overview
5 Transaction Overview 123 Hotels 25,715 Rooms TTM RevPAR: $102 TTM Hotel EBITDA: $391.9mm 8 Hotels 3,146 Rooms TTM RevPAR: $145 TTM Hotel EBITDA: $76.6mm 115 Hotels 22,569 Rooms TTM RevPAR: $97 TTM Hotel EBITDA: $315.3mm 20% Ownership of Ashford Prime Taxable Spin-off Contributed Capital Purchase O
Slide 6: Ashford Prime Overview
6 Ashford Prime Overview High Quality Hotel Portfolio • Geographically diversified and concentrated predominantly in top 20 U.S. markets • Premium portfolio RevPAR of $145 • EBITDA per room of over $24,000 • Strong market share as evidenced by RevPAR penetration index of 115.5 • All current hotels b
Slide 7: Ashford Prime Overview
7 Ashford Prime Overview • Institutional Investor Tailored Platform Highly-Aligned Management Structure • Ashford Trust expected to own 20% of Ashford Prime on a pro forma basis • Management and related parties are expected to hold approximately 19% equity interest in Ashford Prime • The highest ins
Slide 8: Differentiated Investment Strategy
8 Differentiated Investment Strategy Ashford Prime Ashford Trust Investment Focus High-quality, High-RevPAR hotels in major markets expected to generate RevPAR of at least 2x the national average All segments of the hospitality industry excluding the High-RevPAR hotels targeted by Ashford Prime Inve
Slide 9: Ashford Prime Properties
9 Ashford Prime Properties San Francisco San Francisco Courtyard 405 Rooms Seattle Marriott Seattle Waterfront 358 Rooms Seattle Courtyard 250 Rooms Philadelphia Philadelphia Courtyard 498 Rooms Dallas Marriott Plano Legacy 404 Rooms San Diego Hilton Torrey Pines 394 Rooms Hotel Market Rooms Ritz-Ca
Slide 10: High RevPAR Focus
10 High RevPAR Focus • With 2012 RevPAR of $140, Ashford Prime compares favorably to the public lodging REIT universe. Through targeted acquisitions, we expect Ashford Prime to increase its comparative RevPAR profile over time $140 $127 $99 $94 $65 $55 $70 $85 $100 $115 $130 $145 Public Lodging REIT
Slide 11: Ashford Prime Property Descriptions
11 Ashford Prime Property Descriptions Hilton Torrey Pines Built in 1989 394 rooms 60,000 SF of meeting space 2 F&B outlets RevPAR of $123 Penetration index: 98.6 EBITDA of $8mm Located on the famous Torrey Pines Golf Course overlooking Pacific Ocean Public spaces renovated in 2012
Slide 12: Ashford Prime Property Descriptions
12 Ashford Prime Property Descriptions Philadelphia Courtyard Built in 1999 498 rooms 11,000 SF of meeting space 2 F&B outlets RevPAR of $128 Penetration index: 120.9 EBITDA of $10 mm Located in heart of downtown Philadelphia business district proximate to convention center Compreh
Slide 13: Ashford Prime Property Descriptions
13 Ashford Prime Property Descriptions Note: RevPAR, penetration and EBITDA reflect pro forma TTM 6/30/13 figures. Penetration index reflects the quotient of the subject hotel's RevPAR divided by the average RevPAR of the hotels in its competitive set. Marriott Seattle Waterfront Built in 2003 3
Slide 14: Option and Right of First Offer Properties
14 Option and Right of First Offer Properties Note: RevPAR, penetration and EBITDA reflect pro forma TTM 6/30/13 figures. Penetration index reflects the quotient of the subject hotel's RevPAR divided by the average RevPAR of the hotels in its competitive set. *An agreement has been reached to conver
Slide 15: Highly-Aligned Management
15 Highly-Aligned Management • With insider ownership* of both platforms anticipated to be approximately 19%, management is highly-aligned with shareholder interests Public Lodging REITs include: BEE, CHSP, CLDT, DRH, FCH, HST, HT, INN, LHO, PEB, RLJ, SHO Source: Company filings. * Insider ownership
Slide 16: Attractive Corporate Governance and External Advisor Model
16 Attractive Corporate Governance and External Advisor Model • Publicly-traded advisor is not typical of other externally advised REIT structures • Increases transparency • Reduces conflicts of interests • Significant insider ownership of both Ashford Trust and Ashford Prime creates further alignme
Slide 17: Common Investor Questions
17 Common Investor Questions
Slide 18: Common Investor Questions
18 Common Investor Questions Question: "Why not wait until after you have refinanced your upcoming debt maturities, including the Highland Portfolio, and then revisit the spin-off strategy as prior re-financings have seemed to be a positive catalyst for the stock?” Ashford Response: "We had several
Slide 19: Compelling Valuation
Compelling Valuation 19 − As of 6/14/13, Ashford traded at about 12.1x 2013 Consensus EBITDA − Multiple discount relative to peers had expanded over the several months before the spin-off was announced Source: Citi Equity Research 2013 Consensus EBITDA Multiple As of 10/26/12 As of 6/14/13 Ashford 1
Slide 20: Common Investor Questions
20 Common Investor Questions Question: "Won't the smaller market caps of both Ashford Trust and Ashford Prime result in lower EBITDA valuation multiples?” Ashford Response: "We have spent considerable time researching this question and have not found any evidence that market cap impacts EBITDA valua
Slide 21: Common Investor Questions
21 Common Investor Questions • As the chart below shows, there is a very high correlation between RevPAR and EBITDA Multiple for the Hotel REIT universe. Ashford Prime, with its higher RevPAR assets and investment focus, should benefit from this correlation Public Lodging REITs include: AHT, BEE, CH
Slide 22: Common Investor Questions
22 Common Investor Questions • Conversely, there is no correlation between Market Capitalization and EBITDA Multiple for the Hotel REIT universe. This is further evidence that the overall valuation of Ashford Prime should be based more on its RevPAR focus than its market capitalization Public Lodgin
Slide 23: Common Investor Questions
23 Common Investor Questions • We also looked at the correlation between EBITDA multiple and market capitalization for other REIT property types. Below are the R-squared (correlation significance) values for those sectors: • With a 0.58 R-squared value - the apartment REIT sector was the only sector
Slide 24: Ashford Hospitality Prime Spin-Off Overview
NS ASHFORD HOSPITALITY PRIME Spin-Off Overview
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