Ashford Hospitality Trust Inc

Greetings and welcome to Ashford Hospitality Trust fourth quarter 2021 results conference call. At this time, all participants are in a listen-only mode. A question and answer session will follow the formal presentation. If anyone should require operator assistance during a 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, Manager of Investor Relations. 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 fourth quarter and full year of 2021 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, and Chris Nixon, Senior Vice President and Head of Asset Management. The 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 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 accompanying tables or schedules, which have been filed on Form 8K with the SEC on February 23, 2022, and may also be accessed through the company's website at www.ahtreat.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 2021 with the fourth quarter of 2020. I will now turn the call over to Rob Haight. Please go ahead, sir.

Thank you, Jordan. Good morning and welcome to our call. I'll start by providing an overview of the current environment and how Astrid Trust has been navigating the recovery. After that, Derek will review our financial results and Chris will provide an operational update on our portfolio. I'd first like to highlight some of our recent accomplishments and the main themes for our call. First, we saw the lodging recovery continue to take hold in the fourth quarter, leading to strong hotel performance and solid earnings. Second, Our liquidity continues to improve and our cash balance is meaningful. We ended the quarter with approximately $639 million of net working capital, which equates to approximately $18 per diluted share. With our current stock price of around $8, we are trading at a meaningful discount to both our net asset value per share and our net working capital per share. Third, we have lowered our leverage and improved our overall financial position. Since its peak in 2020, we have lowered our net debt plus preferred equity by over $1.1 billion. equating to a decrease in our leverage ratio, defined as net debt plus preferred equity to gross assets, by approximately 13 percentage points. Fourth, during the quarter, we announced an amendment to our strategic financing, which provides us with more flexibility to access the undrawn capital, if needed, even after we have paid off the current balance. During the quarter, we paid off the strategic financing's PIC interest and are now paying the interest current. While the loan doesn't mature for several years, we are looking for opportunities to pay it off later this year, if the industry recovery continues to make progress. Finally, even with an already attractive loan maturity schedule, we remain proactive in our capital markets activities and balance sheet management. During the quarter, we refinanced our mortgage loan for the Marriott Gateway Crystal City, and with the completion of that financing, our next hard debt maturity is not until June of 2023. We are optimistic about the long-term outlook for the company, and by taking decisive actions to strengthen our balance sheet, we feel well-positioned to capitalize on the recovery we're seeing in the hospitality industry. While our optimism remains, we must also acknowledge some risks to the pace of the recovery due to ongoing variants of COVID-19. In addition, we believe the majority of our loans could continue to be in cash traps over the next 12 to 24 months or more, and as a result, we are focused on building our liquidity and improving our capital structure in the months to come. In regards to common dividends, the company and its board of directors previously announced the suspension of the common stock dividend. and therefore the company did not pay a dividend on its common stock and common units for the fourth quarter. However, the board will continue to monitor the situation and assess future dividend declarations. Regarding our preferred dividends, during the fourth quarter, we reinstated and caught up all of our accrued preferred dividends and currently plan to pay those quarterly going forward. As we discussed, this is an important step for us regarding, for several reasons, including it was one of the requirements for Asher Trust to regain its S3 eligibility. For 2022, we will increase our CapEx spending from the previous two years, but we'll still be well below our historical run rate for CapEx. Given the sizable strategic capital expenditures we made in our properties over the past several years, we believe our hotels are in fantastic condition and are well positioned for the industry rebound. Let me now turn to the operating environment at our hotels. The lodging industry is clearly showing signs of improvement. RevPar for all hotels in the portfolio increased approximately 164% in the fourth quarter, with only eight of our hotels having negative hotel EBITDA in the first quarter. This REF PAR result equates to a decrease of approximately 21% versus the fourth quarter of 2019, an improvement from the third quarter of 2021 when REF PAR was down 26% from the same period in 2019. We remain encouraged by the continued strength in weekend leisure demand at our properties. And as we enter 2022, we did see some softness in demand with the Omicron variant that was similar to what we saw with the Delta variant in mid-August. That industry softness bottomed out in the last two weeks of January and has improved since then. We believe the United States is transitioning from a pandemic to an endemic mentality, and we hope to build on the momentum we saw in 2021. We believe our geographically diverse portfolio, consisting of high-quality, well-located assets across the U.S., is well-positioned to capitalize on the acceleration in demand we expect to see across leisure business and groups. We continue to be focused on aggressive cost control initiatives, including working closely with our property managers to minimize cost structures and maximize liquidity at our hotels. This is where our relationship with our affiliated property manager Remington really sets us apart. Remington has been able to manage costs aggressively and adjust to the current operating environment. This important relationship has enabled us to outperform the industry from an operations standpoint for many years. Turning to investor relations, During the quarter, we attended several small cap and lodging investor conferences. We also held a well-attended investor day in New York. If you're not able to join us, I'd encourage you to go to our website and watch the webcast. For 2022, we will expand our efforts to get on the road to meet with investors, communicate our strategy, and explain what we believe to be an attractive investment opportunity in Asher Trust. We look forward to speaking with many of you during these upcoming events. We believe we have the right plan in place to capitalize on the recovery that unfolds. This plan includes continuing to maximize liquidity across the company, optimizing the operating performance of our assets as they recover, leveraging the balance sheet over time, and looking for opportunities to invest and grow the portfolio. We have a track record of success when it comes to product acquisitions, joint ventures, asset sales, and expect that they will continue to be part of our plans moving forward. We entered 2022 with a substantial amount of cash on our balance sheet and are looking for ways to go on the offense. I will now turn the call over to Derek to review our fourth quarter financial performance.