Ashford Hospitality Trust Inc

Greetings and welcome to the Ashford Hospitality Trust Inc. Second Quarter 2020 Results Conference Call. At this time, all participants are in a listen-only mode. A brief question and answer session will follow the formal presentation. If anyone should require operator assistance during the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. It is now my pleasure to introduce your host, Jordan Jennings. Investor Relations for Ashford Hospitality Trust. Thank you. You may begin.

Good day, everyone, and welcome to today's conference call to review the results for Ashford Hospitality Trust for the second quarter of 2020 and to update you on recent developments. On the call today will be Rob Hayes, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, Jeremy Walter, Chief Operating Officer. Your results as well as notice of the accessibility of this conference call on a listen-only basis over the internet were distributed yesterday afternoon in a press release. 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 risks 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 July 29, 2020, 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 second quarter of 2020 with the second quarter of 2019. I will now turn the call over to Rob Hayes. Please go ahead, sir.

Good morning, and welcome to our call. I hope everyone is continuing to be safe and healthy, and these last several months are unlike anything most of us have experienced in our lifetimes, and these remain challenging times for our country, the economy, and of course, the hospitality industry. I'll start with the current environment and how Ashford Trust has managed through the pandemic in the early parts of this recovery. And after that, Derek will review our financial results and Jeremy will provide an operational update on our portfolio. This quarter has been defined by the coronavirus pandemic. And while we have made progress getting our business back up and running, the impact of COVID-19 on the U.S. hospitality industry and the day-to-day operations of our hotels has been profound. As we discussed on our last earnings call, Our response to this pandemic has been swift and comprehensive. We have focused our efforts on providing a safe environment for guests and our staff, the properties, and while at the same time taking aggressive measures to protect our properties and maintain financial flexibility so we can be in a position to return to profitability as the economy opens up and travel resumes. Additionally, given the economic impact of this pandemic, we were required to make difficult decisions and temporarily suspend operations at many of our properties. I'm pleased to report that we currently have only four properties with suspended operations compared to 23 properties at the time of our last earnings call, and those last few properties should be reopening very soon. As we look at our portfolio, we continue to believe the fastest segments to rebound will be leisure and other transient business, with the group segment slower in its recovery. We are concerned about the state of the industry, what it may be after Labor Day. when leisure travel slows and hotels typically rely more heavily on group and business travel as those segments are unlikely to rebound quickly. We do not yet feel confident that we will see a material improvement in occupancy as we go into the fall, which is concerning. There continues to be significant reopening uncertainties in the economy with newly reinstated COVID-19 travel advisories and restrictions in some parts of the country. While we do not expect another national shutdown, we do anticipate some regional impact as travelers are again encouraged to stay at home. Operationally, we are focused on mitigating the financial impact of the pandemic with cost control initiatives, including working closely with our property managers to manage cost structures and maximize liquidity at the properties. And this is where our relationship with our affiliated property manager, Remington, really sets us apart. Remington has been able to quickly cut costs and rapidly adjust this new operating environment. We're proud of their efforts and believe it sets us up well to outperform as the industry recovers. Jeremy will discuss this more in detail shortly. We've also significantly reduced our planned spend for capital expenditures for the year. We've suspended both our common and preferred dividends, and we've reduced our corporate G&A by approximately 25%. Derek will discuss this in more detail around our liquidity shortly. But throughout the quarter, we have taken action to maintain our financial flexibility, including not making principal or interest payments on nearly all of our loans since April 1st. We've been actively working with our lenders and our property-level debt to arrange mutually acceptable forbearance arrangements to reduce our near-term cash utilization and improve our liquidity. We've had some success with those discussions, including executing forbearance or other agreements on six loans secured by 24 hotels. In addition, we have come to agreement in terms on several other loan pools that are currently being documented, and we hope to have them signed up in the next few weeks. Discussions on the remaining loan pools are ongoing. The forbearance agreements typically allow us to defer interest on loans for up to six months, subject to certain conditions. They also allow the company to utilize lender and manager held reserve accounts, which are included in restricted cash in the company's balance sheet, in order to fund operating shortfalls at the hotels. We look forward to providing additional information as we continue to work through this process. It is likely, however, that we will be unable to agree on forbearance terms with all of our loan pools, and investors should anticipate that we may be handing back some assets to lenders in the months to come. There are several reasons why we may decide to give back assets to the lenders. One, there is negative equity in the loan pool that is unlikely to reach positive equity in the medium to long term. Two, there are significant cash requirements to the property, such as operating shortfalls, ongoing debt surface, or CapEx, that we do not believe are economical. Or three, terms the lenders or special servicers are proposing are onerous and make keeping the property unattractive. And while we hope to retain as many of our properties as possible, I do think it is important for our investors to know that we will plan on handing back assets that do not create long-term value for our shareholders. The first half of 2020 has been extraordinary by any measure, and I could not be prouder of the effort and the performance of our teams during this time. I believe our response has been the right one for both short- and long-term health of our guests, our portfolio, the communities we serve, and our shareholders. We are closely monitoring the fluid situation of plans in place to continue to reopen closed properties as government edicts allow and business demand and conditions improve. Our management team has extensive experience in effectively navigating tough market environments and extended downturns. Each crisis is invariably different, but we believe we have the right management team in place to protect the long-term values of our assets and the company. So I'll now turn the call over to Derek to review our second quarter financial performance.