Ashford Hospitality Trust Inc

Hello, and welcome to the Ashford Hospitality Trust third quarter 2023 results conference call. All lines have been placed on mute to prevent any background noise. After the speaker's remarks, there will be a question and answer session. If you would like to ask a question during this time, simply press star one on your telephone keypad. I will now turn the conference over to Jordan Jennings, Director, Investor Relations. Please go ahead.

Good day, everyone, and welcome to today's conference call to review results for Ashford Hospitality Trust for the third quarter of 2023 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, Executive 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 risk, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed in the accompanying filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made at the date of this call and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or solicitation of an offer to buy any securities. Securities will only be maimed at a registration statement and prospectus which can be found at www.sec.gov. In addition, certain terms used in the 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 November 7, 2023, and may also be accessed through the company's website at www.htreap.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 third quarter ended September 30th, 2023 with the third quarter ended September 30th, 2022. I will now turn the call over to Rob Hayes. Please go ahead, sir.

Good morning and welcome to our call. After my introductory comments, Derek will review our third quarter financial results and then Chris will provide an operational update on our portfolio. The main themes for our call today are first, We are very pleased with the strong operating performance and rev part growth we achieved in the third quarter. We are clearly seeing the benefit of a broadly diversified, high-quality portfolio that is balanced across leisure, corporate, and group demand sources. Second, our liquidity and cash position continue to be strong. We ended the quarter with approximately $271 million of net working capital, and our non-traded preferred stock offering continues to ramp up nicely. Third, we are now focused on paying off our corporate financing and have listed several assets for sale. We believe proceeds from these potential asset sales, along with the capital raised from our non-trade preferred offering, may be sufficient to completely pay off our corporate financing during 2024. Now for some additional details on these three themes. REVPAR for all hotels in our portfolio increased 4% in the third quarter compared to the prior year quarter. This REVPAR growth was led by average daily rates, which increased 2.2% over the prior year quarter, And we also saw strong growth in occupancy, which increased 1.7% over the prior year quarter. In addition to our solid hotel performance, the vast majority of our hotels are now out of their respective cash traps. This is an important step for our company as it allows us the flexibility to use cash to optimize our capital structure, pay down debt, or invest in growth opportunities. Looking ahead, we believe our geographically diverse portfolio consisting of high-quality assets with best-in-class brands and management companies is well-positioned. We also believe that our relationship with our affiliated property manager, Remington, really sets us apart as they have been able to consistently manage costs and optimize revenues aggressively. Regarding asset management, I'll provide some highlights that Chris will cover in more detail shortly. We continue to engage in beneficial strategies that we believe will create long-term value. During the quarter, we announced that our Crowne Plaza La Concha Hotel in QX, Florida is on track to convert to a Marriott autograph collection property in 2024. it will be rebranded as La Concha Key West, an autograph collection hotel, as we anticipate the conversion will create a distinctive theme and style for the hotel. With its A-plus prime location right on Duval Street in the heart of Key West, the upbranding of this historic landmark hotel should elevate the property into a desirable niche in a very attractive, high barrier to entry, high rev power market. We also recently announced a new franchise agreement with Marriott International to convert our Le Pavillon Hotel in New Orleans, Louisiana, to attribute portfolio property. We've had great success with the attribute portfolio with our La Posada Resort and Spa in Santa Fe, New Mexico, and are looking to capture similar upside at Le Pavillon. This up-branding includes transforming the lobby bar and extensive exterior work, as well as upgrading the restaurant, guest rooms, guest bathrooms, and corridors. The hotel is a prime location and has close proximity to major demand generators in downtown New Orleans. And post-conversion, we believe the new tribute portfolio property should realize a 10% to 20% reparp premium compared to pre-conversion. The planned conversions of Le Pavillon and La Concha are both excellent examples of how we go about unlocking embedded value in our portfolio. Turning to capital markets, during the quarter we made significant progress on our loan extensions and made the strategic decision not to make required paydowns on our keys A, B, and F loan pools in order to meet extension debt yield tests. This was a prudent economic decision that reflected a comprehensive capital management process by the company, which explored and assessed multiple options for these assets, including refinancing, extensions, and potential asset sales. We have been committed to deleveraging the company over time, and this is a significant step towards a long-term goal of creating a more sustainable capital structure. Additionally, capital recycling remains an important component of our strategy, and we continue to pursue opportunities to sell assets. During the quarter, we sold a small asset in Orlando for nearly $15 million, and have six other assets that are currently being marketed for sale. We've also identified several additional assets that we may bring to market for sale if market conditions warrant. We expect any net proceeds from these sales will primarily be used for debt pay downs. We also continue to be excited about our non-traded preferred stock offering and believe this offering will not only provide an attractive source of capital, but it will allow us to accretively grow our portfolio over time, subject to future market conditions. We believe access to this growth capital is a significant competitive advantage particularly given the fact that lodging REITs are currently trading at material discounts to net asset values. Our preference would be to use that capital for future growth, though we may use some of the capital to pay down debt or other corporate uses as needed. We continue to build a selling syndicate and currently have 40 signed dealer agreements representing over 5,402 reps selling the security. We are still early in the capital raising process, and to date have raised approximately $77 million of gross proceeds, including $28 million during the quarter. We believe that we have the right plan in place to move forward and maximize value at Asher Trust. This plan includes continuing to grow liquidity across the company, raising attractively priced capital when possible, optimizing the operating performance of our assets, improving that balance sheet over time through asset sales and deleveraging, and looking for opportunities to invest and grow our portfolio. We ended the third quarter with a substantial amount of cash in our balance sheet, and with the launch of our non-traded preferred stock offering, we are excited about the opportunities we see in front of us. And now I'll turn the call over to Derek to review our third quarter financial performance.