Ashford Hospitality Trust Inc

Please stand by, we're about to begin. Good day and welcome to the Ashford Hospitality Trust first quarter 2019 results conference call. Today's conference is being recorded. At this time, I would like to turn the conference over to Ms. Jordan Jennings. Please go ahead.

Good day everyone and welcome to today's conference call to review the results for Ashford Hospitality Trust for the first quarter of 2019 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 Welter, Chief Operating Officer. Your results as well as the 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 and are being made pursuant to the safe harbor provisions of the 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 were 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 accompanying tables or schedules, which have been filed on Form 8K with the SEC. SEC on May 2, 2019 and may also be accessed through the company's website at www.ahtread.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 first quarter of 2019 with the first quarter of 2018. 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 first quarter results. 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 a 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, Asherd Inc. has 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 at properties owned by the company. We believe the ERP has the opportunity to significantly improve returns on hotel acquisitions. The attractiveness of the ERP is to make good deals great deals. Since establishing the ERP, we have 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 ERFP funding. To date, we have received approximately $21 million of the $40.6 million that Ashford, Inc. has committed to provide us for the four acquisitions under the ERFP. In January, we acquired the Embassy Suites New York Midtown Manhattan for $195 million. In connection with this acquisition, Astrid, Inc. committed to provide us with approximately $19.5 million under the terms of the ERFP. We expect this newly constructed 41-story hotel, ideally located near Bryant Park and Times Square, to benefit from being the only Embassy 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. While this property is still ramping up operations, having only recently opened in early 2018, the hotel performed exceptionally well during the first quarter. In March, the hotel's penetration index already achieved our underwriting target for the year. Looking ahead, we believe there is significant upside at the property. Additionally, in February, 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 23% premium to yesterday's stock price. We also assumed a $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, Ashford, Inc. provided us with $5 million as part of the ERP. Year to date, the hotel's penetration index has already grown 2.8 percentage points, and we're enthusiastic about the future performance of this asset. We believe these acquisitions are highly favorable investments on their own. However, with the ERP, the projected return 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 ERP provides us not only with a competitive advantage, but is also structured to enhance shareholder value. Let me now turn to our first quarter performance. Our actual rev par for all hotels for the quarter increased 2.1%, while comparable rev par for all hotels increased 1.9%. For the first quarter, comparable rev par for all hotels not under renovation increased 2.7%. For the first quarter, we reported AFFO per share of 26 cents and adjusted EBITDA RE of $100.5 million. As for our balance sheet, we believe in the benefits of an appropriate amount of non-recourse leverage to enhance equity returns. We also believe having floating rate debt has several benefits, including flexibility, as well as being a natural hedge against our cash flows. Over the past couple of years, we've been very active in refinancing a majority of our existing loans, both to improve the spreads compared to the prior loan terms and to extend our maturities. To that end, during the quarter, we refinanced a mortgage loan on the Renaissance Nashville and Weston Princeton with a new loan that totaled $240 million and has a lower spread than the previous loan. Derek will provide more information on that refinancing shortly. With all our recent... financing activity, we now have an attractive, well-laddered maturity schedule. We also seek to maintain a high cash and cash equivalence balance between 25 percent and 35 percent of our equity market capitalization for financial flexibility. We note 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 first quarter of 2019, our net working capital totaled $359 million, equating to approximately $2.89 per share, which represents a significant 51% of our current share price as of yesterday's close. We also continue to make progress with our investor outreach efforts, including organizing and hosting a Key West market tour in April that included several of our REIT peers' properties and management teams. The event was very well attended by investors and analysts. During the remainder of 2019, we will continue 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 upcoming events. Looking ahead, we have a high-quality portfolio and well-diversified portfolio, and we remain focused on accretive transactions as well as proactive asset management initiatives. We are committed to maximizing value for our shareholders as we focus on generating solid operating performance and continuing to seek investment opportunities, and efficiently managing our balance sheet. I will now turn the call over to Derek to review our first quarter financial performance.