Ashford Hospitality Trust Inc · NYSE:AHT
Ashford Hospitality Trust — NAREIT Annual Convention November 2011
50 slides from Ashford Hospitality Trust's conference presentation, Nov 14, 2011
Slide 1: NAREIT Annual Convention November 2011
NAREIT Annual Convention November 2011
Slide 2: Safe Harbor
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 r
Slide 3: Property Tour
PROPERTY TOUR
Slide 4: Marriott Suites Dallas Market Center
Marriott Suites Dallas Market Center
Slide 5: Marriott Suites Dallas Market Center
Marriott Suites Dallas Market Center • Acquired as part of the CNL portfolio in April 2007 • 265 suites • Built in 1998 • 5,300 sq ft of meeting space • Managed by Marriott • Located in the heart of Market Center with easy access to both DFW Airport and Love Field Airport • Achieved a 78% cumulative
Slide 6: Marriott Suites Dallas Market Center Opportunities
Marriott Suites Dallas Market Center Opportunities • Drive weekday “premium rate mix” through an aggressive pricing posture on the 125 known sell out days in 2012 • The hotel will focus specifically on increasing local catering sales as it has experienced increased demand for small, local catering e
Slide 7: Marriott DFW Airport
Marriott DFW Airport
Slide 8: Marriott DFW Airport
Marriott DFW Airport • Acquired as part of the Highland portfolio in March 2011 • 484 rooms, 7 suites • Built in 1982 • 17,800 sq ft of meeting space • Managed by Marriott • Located just two miles away from the DFW airport and is highly visible and easily accessible from primary airport routes • For
Slide 9: Marriott DFW Airport Opportunities
Marriott DFW Airport Opportunities • Through managing its Group Arrival Pattern mix more vigilantly, hotel will achieve higher rated midweek business and more shoulder weekend group business • Ashford requested Marriott to add an on-property Destination Sales Executive to close more group sales oppo
Slide 10: Ashford Overview
ASHFORD OVERVIEW 10
Slide 11: Ashford Overview
Ashford Overview • Favorable macro market dynamics • Focused portfolio, positioned for growth • Proactive debt and equity capital market strategies • Outperformance • High insider ownership
Slide 12: Attractive Supply/Demand Imbalance
Attractive Supply/Demand Imbalance • Demand increase is currently expected to outpace supply increase through 2014 10.0 8.0 6.0 Growth 4.0% Year 2.0 0.0 -over -2.0 -Year -4.0 -6.0 -8.0 1988 1989 1990 1991 1992 1993 1994 1995 1996 1997 1998 1999 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010
Slide 13: Attractive Industry Fundamentals
Attractive Industry Fundamentals Trailing 3-Mo Avg Seasonally-Adjusted Real RevPAR (2011 $’s) $74.00 $72.00 $70.00 $68.00 $66.00 $64.00 $62.00 $60.00 $58.00 $56.00 $54.00 $52.00 Source: Smith Travel Research (non-seasonally adjusted nominal monthly figures) 13
Slide 14: PKF's Nominal US RevPAR Forecast
PKF’s Nominal US RevPAR Forecast 10.0% 7.7% 8.1% 6.1% 7.2% 7.3% 7.0% 5.5% 5.0% 3.2% 0.0% -2.0% -5.0% 5-Year RevPAR Growth CAGR: 6.5% -10.0% -15.0% -16.6% -20.0% 2006 2007 2008 2009 2010 2011F 2012F 2013F 2014F 2015F Source: Smith Travel Research / Historical RevPAR Growth Forecasted RevPAR Growth PK
Slide 15: Ashford Snapshot
Ashford Snapshot Portfolio Statistics* Financial Statistics* Total Enterprise Value $4.0 B Recent Share Price $7.74 (11/11/11) Total Gross Assets $4.9 B # Fully Diluted Shares 84.3 M Peer Comparison 2nd Largest Leverage Ratio 59.4% # of Hotels 124 Debt Wtd. Avg. Maturity 4.1 Years # of Owned Rooms 2
Slide 16: Broad Geography
Broad Geography • Ashford’s geographic footprint encompasses 29 states and Washington DC West Coast includes Alaska WEST COAST MIDDLE AMERICA EAST COAST EBITDA by Region TEXAS EAST COAST: 51% WEST COAST: 22% TEXAS: 12% MIDDLE AMERICA: 15% 16
Slide 17: MSA
MSA • The vast majority of Ashford’s EBITDA comes from top 25 markets, with nearly 90% coming from top 50 markets As % of TTM Q3 2011 EBITDA 11% 16% 73% Top 25 Top 50 Other
Slide 18: Chain Scale
Chain Scale • Approximately 96% of Ashford’s EBITDA comes from upper upscale and upscale assets As % of TTM Q3 2011 EBITDA 3% 1% 38% 58% Luxury Upper Upscale Upscale Upper Midscale 18
Slide 19: Brand Family
Brand Family • 85% of Ashford’s EBITDA comes from Marriott and Hilton branded assets As % of TTM Q3 2011 EBITDA 5% 4%3% 3% 32% 53% Marriott Hilton Hyatt Starwood Intercontinental Independent 19
Slide 20: Transient vs. Group vs. Contract
Transient vs. Group vs. Contract • Our customers are predominantly transient, with a strong emphasis on corporate business 4% 25% 55% 16% Transient — Corporate Transient — Leisure Group Contract 20
Slide 21: Hotel EBITDA Margin Change Comparison
Hotel EBITDA Margin Change Comparison HOTEL EBITDA MARGIN Y-O-Y CHANGE (BPS) (Peers include: BEE, DRH, FCH, HST, HT, LHO, PEB & SHO) 300 200 201 153 114 78 86 100 53 — (100) (58) (106) (200) (300) (400) (406) (500) (487) (600) 2007 2008 2009 2010 YTD Q3 2011 Peer Avg AHT 21
Slide 22: Hotel EBITDA Flows Comparison
Hotel EBITDA Flows Comparison HOTEL EBITDA FLOWS (Peers include: BEE, DRH, FCH, HST, HT, LHO, PEB & SHO) 120% 104% 100% 80% 64% 60% 51% 53% 49% 49% 39% 41% 40% 37% 20% 8% 0% 2007 2008 2009 2010 YTD Q3 2011 Peer Avg AHT 22
Slide 23: Debt Maturity Schedule
Debt Maturity Schedule AHT Debt Maturity Schedule $1,200,000 $1,000,000 $800,000 (000’s) $600,000 Debt $ $400,000 $200,000 $0 2011 2012 2013 2014 2015 2016 2017 Beyond 23
Slide 24: Significantly Reduced Share Count
Significantly Reduced Share Count % Change in Fully Diluted Share Count : 6/30/07 vs. Current 350.0% 300.0% 287% 250.0% 200.0% 145% 150.0% 118% 108% 98% 100.0% 82% 76% 50.0% 30% 0.0% -50.0% -41% -100.0% AHT BEE DRH FCH HST HT LHO SHO PEER AVG Source: SNL, Company Filings & Street Research. 24
Slide 25: Consistent Earnings Growth
Consistent Earnings Growth Ashford’s Historical AFFO per Share $2.00 $1.86 $1.80 $1.60 $1.50 $1.40 $1.31 $1.28 $1.20 $1.13 $1.12 $1.00 $0.96 $0.80 $0.60 $0.41 $0.40 $0.20 $- $- 2003 2004 2005 2006 2007 2008 2009 2010 3Q 2011 TTM 25
Slide 26: AFFO per Share Outperformance
AFFO per Share Outperformance TTM AFFO Per Share (2007Q2 = 100%) Peers Include: BEE, DRH, FCH, HST, HT, LHO, SHO 160% +48% 140% 120% 100% 80% 60% 40% 20% -68% 0% Source: SNL & Company Filings Ashford Peer Average 26
Slide 27: Reinstated Dividend w/ Growth Potential
Reinstated Dividend w/ Growth Potential • Given the material reduction in our common share count, Ashford is well positioned to cover and potentially grow its dividend AFFO Per Share / Dividend Coverage 5.0x 4.7x 4.5x Though Ashford didn’t pay a dividend in 2009 & 2010, 4.0x it could have covered it
Slide 28: Most Highly-Aligned Management Team
Most Highly-Aligned Management Team Insider Ownership % 20% 19% 18% 16% 16% 14% 12% 10% 8% 6% 6% 4% 4% 3% 3% 2% 2% 2% 1% 1% 1% 1% 0% AHT HT CLDT INN FCH HST PEB CHSP DRH SHO BEE LHO Source: 2011 Proxy Filings 28
Slide 29: Ashford Overview
Ashford Overview • Favorable macro market dynamics • Focused portfolio, positioned for growth • Proactive debt and equity capital market strategies • Outperformance • High insider ownership 29
Slide 30: Highland Transaction Update
HIGHLAND TRANSACTION UPDATE
Slide 31: Highland Portfolio
Highland Portfolio Hilton Parsippany Renaissance Palm Springs The Melrose — Washington, DC Marriott DFW Airport Hyatt Regency Wind Watch Marriott Plaza San Antonio Boston Back Bay Hilton Hilton Tampa Westshore Renaissance Nashville Marriott Sugar Land Hyatt Regency Savannah Ritz-Carlton Atlanta West
Slide 32: Highland Transaction Summary
Highland Transaction Summary Transformational 28-hotel, $1.3 billion acquisition with 8,084 rooms Primarily upper-upscale and luxury full-service assets Expands Ashford’s presence in key markets (Washington D.C and NY/NJ) and into new markets (Boston and Nashville) Significant growth potential with
Slide 33: Portfolio Upgrade
Portfolio Upgrade Legacy Ashford vs. Highland EBITDA Concentration (TTM Q3 ‘11) 100.0% 90.0% 80.0% 75% 76% 72% 68% 70.0% 62% 61% 60.0% 57% 50.0% 40.0% 30.0% 25% 20.0% 10.0% 0.0% Top 25 Markets Luxury / Upper- Full-Service Urban Upscale Legacy Ashford Highland 33
Slide 34: Price Per Key Comparison
Price Per Key Comparison Highland Purchase Price Per Key Comparison ($ Thousands) $300 $250 $200 $150 $269 $158 $244 $158 $100 35% 41% discount to discount to 2007 $50 recent peer Highland acquisitions purchase $- Peer Purchase Avg. — AHT Highland 2007 Highland AHT Highland 2009 to Current Purchase
Slide 35: Replacement Cost per Key
Replacement Cost per Key Replacement Cost Per Key Estimate $350,000 Highland was purchased for $158,000 per key — a 44% $300,000 discount to replacement cost $281,000 $250,000 $233,000 $218,000 $200,000 $150,000 $100,000 $50,000 $- Source: Estimated based Legacy AHT Highland Total on JP Morgan Resea
Slide 36: Highland Operational Goals
Highland Operational Goals • When we took over the portfolio there were two primary operational goals: Put cost structures in place to achieve maximum operating flow throughs — The portfolio was seriously neglected when we took over — We felt confident that the Remington-managed properties were goin
Slide 37: Highland Portfolio — GOP Flow Comparison
Highland Portfolio — GOP Flow Comparison • Ashford’s Asset Management and Remington’s combined expertise have enabled our legacy portfolio to outperform while Highland consistently lagged benchmark goals until we took over in March 2011 GOP Flow Comparison — January 2010 to September 2011 150.0% Pre
Slide 38: Highland Portfolio — Year Over Year Comparisons
Highland Portfolio — Year Over Year Comparisons GOP Margin Change BPS GOP Flow Quarter <95> 8.8% 1 st Pre-Ashford Pre-Ashford Quarter 218 94.6% 2 nd Post-Ashford Post-Ashford Quarter 280 78.6% 3 rd Post-Ashford Post-Ashford 38
Slide 39: Highland Portfolio — Performance by Manager
Highland Portfolio — Performance by Manager GOP Margin Change BPS GOP Flow 366 93.3% Quarter Remington Remington 3 rd 199 58.7% Non-Remington Non-Remington 39
Slide 40: Highland Portfolio — GOP Flow Comparison
Highland Portfolio — GOP Flow Comparison • Brand-managed properties have also shown significant flow improvement due to Ashford asset management expertise Brand-Managed GOP Flows by Month 100% 73.9% 78.2% 80% 69.2% 68.6% 61.4% 60% 41.9% 36.7% 40% 17.3% 20% Flow 0% GOP -20% -40% -60% -47.7% -80% Pre-
Slide 41: Case Study — Crowne Plaza Ravinia
Case Study — Crowne Plaza Ravinia • Eliminated 6 managerial/supervisory positions • Despite RevPAR decrease, banquet and catering sales are up significantly (~ $1.0m) due to aggressive selling efforts • Since takeover, property has achieved $567K GOP $ surplus over AHT metric despite 1.2% RevPAR dec
Slide 42: Case Study — Hyatt Savannah
Case Study — Hyatt Savannah • Since takeover, property has achieved $74K GOP $ surplus over AHT metric despite -2.9% revenue decline • Asset Management team in collaboration with Hyatt has identified ~$375K annualized savings • Eliminated 5 supervisory/management positions since takeover • Increased
Slide 43: Remington RevPAR Index Improvement
Remington RevPAR Index Improvement • RevPAR for Remington-managed properties is improving sooner than expected and is beginning to more closely match brand-managed properties 2.0% 1.4% 0.9% 1.0% 0.2% 0.0% -1.0% -0.7% -2.0% -1.9% -3.0% -4.0% -5.0% -5.2% -6.0% Remington RevPAR Index Brand-Managed RevP
Slide 44: Highland Portfolio NOI
Highland Portfolio NOI • Highland NOI is exceeding expectations, currently at 88% of first 12 months underwriting growth in only six months’ time Highland Portfolio Net Operating Income $88 $87 $86 $86 $84 $82 millions) $82 $80 $79 (in$ NOI $78 $76 $74 Mar 2011 TTM Jun 2011 TTM Sep 2011 TTM Underwri
Slide 45: Significant Operational Upside
Significant Operational Upside • If Highland’s EBITDA was the same % of its peak level as our legacy portfolio, its EBITDA would be almost $10 million higher • This would equate to about an additional $1.40 in share price at a 12x EBITDA multiple % of Peak EBITDA Comparison 100% 95% 90% 85% 80% 75%
Slide 46: Key Capex Renovations
Key Capex Renovations Property Project Scheduled Start Date Budget Courtyard Denver Lobby Bistro Completed in Q2’11 $875,000 Hyatt Windwatch Exterior Façade In progress $1,400,000 Marriott Omaha Lobby & Restaurant Early November $1,350,000 The Churchill Lobby & Restaurant Mid-November $871,000 The M
Slide 47: Case Study — CY Denver Lobby Bistro
Case Study — CY Denver Lobby Bistro • Courtyard Bistro Lobby renovation was GSS Lobby Rankings completed in Q2 2011 2009 Pre-Renovation 510 out of 780 2010 Pre-Renovation 560 out of 808 • Lobby GSS scores improved greatly from 1H 2011 During Renovation 771 out of 818 previous years 2H 2011 Post-Reno
Slide 48: Case Study — Melrose Hotel
Case Study — Melrose Hotel • Last renovation in 2002 • RevPAR Index dropped from 101.4% in 2007 to 83.6% YTD September 2011 • Location on Pennsylvania Ave. adjacent to Georgetown and 8 blocks from White House and National Mall • Over sized rooms of average 425 sq. ft. with 35 suites Financial Statis
Slide 49: Highland Transaction Conclusion
Highland Transaction Conclusion We purchased a remarkable portfolio for nearly half of its replacement cost and materially below what our peers are paying for assets We have made significant progress in achieving operational flow throughs and pushing RevPAR yield index In only six months’ time our a
Slide 50: NAREIT Annual Convention November 2011
NAREIT Annual Convention November 2011
Ashford Hospitality Trust — NAREIT Annual Convention November 2011 on 6ix