Ashford Hospitality Trust Inc

Greetings and welcome to Ashford Hospitality Trust first quarter 2022 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 the conference, please press star zero on your telephone keypad. As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Jordan Jennings, Manager, Investor Relations. Please proceed.

Good day, everyone, and welcome to today's conference call to review the results for Ashford Hospitality Trust for the first quarter of 2022 and to update you on recent developments. On the call today will be Rob Haight, 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 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 May 3, 2022 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 re-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 2022 with the first quarter of 2021. I will now turn the call over to Rob Hayes. Please go ahead, sir.

Good morning. Welcome to our call. I'll start by providing an overview of the current environment and how Ashford Trust has been navigating the recovery. After that, Derek will review our financial results, and then 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 sequential REVPAR improvement each month as we moved through the first quarter, and that improvement has continued into the second quarter. Second, our liquidity and cash position continue to be strong. We ended the quarter with approximately $609 million of net working capital, which equates to approximately $17 per diluted share. With yesterday's closing stock price of $7.32, we believe 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 a billion dollars, equating to a decrease in our leverage ratio defined as net debt plus preferred equity gross assets by approximately 12 percentage points. Fourth, during the quarter, we're extremely pleased to announce that we filed a preliminary registration statement with the SEC for the future offering of a non-traded preferred equity. Importantly, this announcement demonstrates our strategic pivot from defense to offense, as we believe this offering will provide an attractive cost of capital and allow us to accretively grow our portfolio over time, subject to future market conditions. We believe access to this attractive growth capital is a significant competitive advantage, particularly given the fact that lodging REITs are trading at material discounts to their net asset values. We expect to commence issuing limited amounts of non-traded preferred equity beginning the third quarter of 2022, subject to satisfying certain customary conditions. We are optimistic about the long-term outlook for the company, and by taking strategic actions to strengthen our balance sheet, we feel well positioned to capitalize on this recovery we are seeing in the hospitality industry. Having said that, we haven't raised any equity capital this year, given the softness in our stock price, and we'll look to the potential proceeds from our non-traded preferred as our growth capital. While our cash position is strong, we expect several of our loan pools to remain in cash traps over the next 12 to 24 months. For 2022, we are increasing our capital spending from the previous two years, but we will still be well below our historical run rate for CapEx. Given the sizable strategic capital expenditures we made in our properties pre-pandemic, we believe our hotels are in fantastic condition and are well positioned for industry rebound. CapEx spend during the first quarter was $22.7 million. Let me now turn to the operating performance at our hotels. The lodging industry is clearly showing signs of improvement. RevPAR for all hotels in the portfolio increased approximately 103% for the first quarter. This RevPAR result equates to a decrease of approximately 23% versus the first quarter of 2019. March was the best performing month of the first quarter with RevPAR down only 13% versus 2019. Preliminary numbers from April show that RevCar continued to improve across the portfolio with the month down only 7% versus 2019. We remain encouraged by the continued strength in weekend leisure demand at our properties. As we entered 2022, we did see some softness in demand during January with the Omicron variant that was similar to what we saw with Delta variant in mid-August. That industry softness bottomed out in the last two weeks of January and improved during the remainder of the quarter. 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 US is well positioned to capitalize on the acceleration of demand we expect to see across leisure, business, and group. 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 has really set 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. Additionally, capital recycling remains an important component of our strategy and we are likely to begin to pursue some opportunities to sell certain non-core assets. When doing this, we will remain disciplined in our approach and take into consideration many factors such as the impact on EBITDA, leverage, CapEx, and RevCar, among others. Turning to investor relations, for the remainder of 2022, we will expand our efforts to get out on the road, meeting with investors, communicate our strategy, and explain what we believe to be an attractive investment opportunity in Ashford 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 as it 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 property acquisitions, joint ventures, and asset sales, and expect they will continue to be part of the plan moving forward. We ended the 2022 first quarter with a substantial amount of cash in our balance sheet, and with the upcoming launch of our non-traded preferred stock offering, we are excited about the opportunities we see in front of us. I'll now turn the call over to Derek to review our first quarter financial performance.