Ashford Hospitality Trust Inc

Good day, ladies and gentlemen, and welcome to the Ashford Hospitality Trust Fourth Quarter 2018 Near End Results Conference Call. Today's conference is being recorded. At this time, I'd like to turn the conference over to Mr. Jordan Jennings, Investor Relations for Ashford Hospitality Trust. Please go ahead, sir.

Good day, everyone, and welcome to today's conference call to review the results for Ashford Hospitality Trust for the fourth quarter and full year 2018 and to update you on recent developments. On the call today will be Douglas Kessler, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, Jeremy Walter, Chief Operating Officer. The results, as well as a notice of the accessibility of this conference call, on a listen-only basis over the Internet, were distributed yesterday afternoon in a press release that has been covered by the financial media. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon Forward-looking information are being made pursuant to the safe harbor provisions of these federal securities regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risk, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the company's filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call and the company is not obligated to publicly update or revise them. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and the company's tables or schedules, which have been filed on Form 8K with the SEC on February 28, 2019, and may also be accessed through the company's website at www.ahtreet.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the fourth quarter of 2018 with the fourth quarter of 2017. I will now turn the call over to Douglas Kessler. Please go ahead, sir.

Good morning, and thank you for joining us to discuss Ashford Hospitality Trust's fourth quarter progress. I want to begin by providing an update on the success we're having with our ERP initiative with Ashford, Inc. Then I'll review our financial results and other items. Given our approximately 17% insider ownership of Ashford Trust, we believe we have tremendous alignment with our shareholders, which encourages us to think and act like owners. Our strategies throughout our 16-year history have consistently focused on ways to create shareholder value. Many of our diligent efforts have been economically transformational and successful over the years. We believe that the ERP is one of these initiatives and will provide meaningful benefits to improve our competitive position as well as increase shareholder value. As we've discussed previously pursuant to the ERP initiative, Ashford Inc. is committed to provide $50 million to the company on a programmatic basis, equating to approximately 10% of each new investment's acquisition price to be used for the purchase of FF&E and properties owned by the company. We believe the ERP program has the opportunity to significantly improve returns on hotel acquisitions and benefit us by effectively expanding cash available for future investment or other purposes. The attractiveness of the ERP is to make good deals great deals. The existence of this program is also advantageous given the improvement in deal flow for properties that fit our focused investment criteria of upper upscale full service hotels. Very competitive bidding environment for acquisitions today. We see this program providing us with a significant advantage to win deals with accretive returns. We intend to be successful in our efforts as we balance expected returns, underwritten growth, and our cost of capital. Since establishing the ERP, we've already completed $406 million of high-quality acquisitions that have utilized the program, which equates to approximately 80% committed utilization of the pledged $50 million of ERP funding. To that end, in October, we completed the acquisition of the 157-room La Posada de Santa Fe in Santa Fe, New Mexico for $50 million. The purchase of La Posada was the company's second hotel acquisition to benefit from the ERP with Asher Inc., committing to fund $5 million. The acquisition increases our ownership presence in a very attractive Santa Fe market. With its strong Marriott brand affiliation and high-quality amenities, La Posada is positioned as one of the leading properties in the lodging market with excellent demand and supply characteristics. The hotel performed exceptionally well during the fourth quarter with red bar and index growth of 9.8% and 7.3% respectively since we acquired the property. Additionally, Remington Lodging, who also manages our Hilton Santa Fe, took over management of the property upon completing the acquisitions. and we expect to realize significant value-add operational synergies for Remington's management of both properties. Our momentum carried into 2019 when, in January, we acquired the 310-room Embassy Suites by Hilton New York Midtown Manhattan for $195 million. In connection with this acquisition, Astrid Inc. has committed to provide Astrid Trust with approximately $19.5 million under the terms of ERP. We expect this newly constructed 41-story hotel, ideally located near Bryant Park and Times Square, to benefit from being the only MC Suites in the dynamic Manhattan market. Additionally, as our first direct hotel investment in New York City, we believe the recent positive changes in Manhattan's hotel metrics point to favorable timing of this addition to our portfolio. Having recently opened in 2018, this property is still ramping up operations. We believe there is significant upside at the property and we expect the ERP contribution to this investment will significantly increase the returns for our shareholders. Additionally, this week we purchased the Hilton Santa Cruz Scotts Valley in Santa Cruz, California for $50 million. Our latest acquisition to take advantage of the ERP has an attractive location near the expanding tech market in San Jose and just minutes from Santa Cruz, one of Northern California's most desirable beach communities. This property also benefits from being the only full service Hilton branded asset in the Santa Cruz market. The acquisition was partially funded by the issuance of approximately 1.5 million OP units. The OP units were issued at a price of $7 per unit, which reflects an approximate 31% premium to yesterday's stock price. We also assume $25.3 million mortgage loan that bears interest at a fixed rate of 4.7% and matures in March of 2025. In conjunction with this transaction, Astrid, Inc. is committed to provide us with $5 million as part of the ERFP. We believe these acquisitions are highly favorable investments on their own. However, with the ERFP, the returns should be even greater. I can assure you that our underwriting efforts continue to be focused, diligent, and with the same high standards to improve our portfolio with the best assets for the best value. We strongly believe that the ERFP provides us not only with the competitive advantage but it is also structured to substantially enhance shareholder value. Let me now turn to our fourth quarter and full year performance. Our actual rev par for all hotels for the full year increased 1%, while comparable rev par for all hotels during the fourth quarter decreased 0.6%. For the fourth quarter, comparable rev par for hotels not under renovation increased 0.6%. For the fourth quarter, We reported AFFO per share of 18 cents and we reported adjusted EBITDA RE of $89.8 million. For the full year, AFFO per share was $1.26 and adjusted EBITDA RE was $411.5 million. As for our balance sheet, we believe in the benefits of an appropriate amount of non-recourse leverage to enhance equity returns. Over the past couple of years, we've been very active and refinancing majority of our existing loans, both to improve the spreads compared to the prior loan terms and to extend our maturities. We also seek to maintain a high cash and cash equivalence balance between 25% and 35% of our equity market capitalization for financial flexibility. We know that this excess cash balance can provide a hedge during uncertain economic times, as well as the requisite funds to capitalize on attractive investment opportunities as they arise. As of the fourth quarter of 2018, our net working capital totaled $398 million, equating to approximately $3.29 per share, representing a significant 61% of our current share price as of yesterday's close. We continue to make progress on our investor outreach efforts, and during 2019, we intend to get out on the road to meet with investors to communicate our strategy and the attractiveness of an investment in Asher Trust. We look forward to speaking with many of you during the upcoming events. Looking ahead to 2019, we have a high-quality, well-diversified portfolio, and we remain focused on accretive transactions as well as proactive asset management initiatives. We're committed to maximizing value for our shareholders as we focus on generating solid operating performance, continuing to seek investment opportunities, and efficiently managing our balance sheet. I'm now going to turn the call over to Derek to review our fourth quarter financial performance.