ASHFORD HOSPITALITY TRUST INC (Form: 8-K, Received: 03/16/2020 06:29:04)

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the

Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 13, 2020

ASHFORD HOSPITALITY TRUST, INC.

(Exact name of registrant as specified in its charter)

Maryland

001-31775

86-1062192

(State or other jurisdiction of

incorporation or organization)

(Commission file number)

(I.R.S. Employer Identification

Number)

14185 Dallas Parkway, Suite 1100

Dallas, Texas

75254

(Address of principal executive

offices)

(Zip Code)

Registrant’s telephone number, including area code: (972) 490-9600

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).

Emerging growth company ¨

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	AHT	New York Stock Exchange
Preferred Stock, Series D	AHT-PD	New York Stock Exchange
Preferred Stock, Series F	AHT-PF	New York Stock Exchange
Preferred Stock, Series G	AHT-PG	New York Stock Exchange
Preferred Stock, Series H	AHT-PH	New York Stock Exchange
Preferred Stock, Series I	AHT-PI	New York Stock Exchange

Item 1.01. Entry into a Material Definitive Agreement.

Extension Agreement

On March 16, 2020, Ashford Hospitality Trust, Inc. (“Ashford Trust” or the “Company”) announced entry into the Extension Agreement, dated March 13, 2020 (the “Extension Agreement”), related to the Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement (the “ERFP Agreement”), among Ashford Trust, Ashford Inc. (“AINC”), Ashford Hospitality Advisors LLC, Ashford Hospitality Limited Partnership and Ashford TRS Corporation. As previously disclosed, in connection with our acquisition of The Embassy Suites New York Manhattan Times Square on January 23, 2019, AINC is committed to provide us with approximately $19.5 million, in exchange for FF&E at our properties, subject to the terms of the ERFP Agreement. As of March 13, 2020, $8.1 million had been funded and $11.4 million remains unfunded. Under the terms of the Extension Agreement, the original obligation to provide the remaining $11.4 million in funding by January 22, 2021 has been extended to December 31, 2022.

This summary description of the Extension Agreement is qualified in its entirety by the Extension Agreement, a copy of which is included as Exhibit 10.2 to this Report and is incorporated herein by reference.

Hotel Management Letter Agreement

Pursuant to the Consolidated, Amended and Restated Hotel Master Management Agreement dated August 8, 2018, by and among Ashford TRS Corporation, RI Manchester Tenant Corporation, CY Manchester Corporation and Remington Lodging & Hospitality, LLC (“Remington”) (the “hotel management agreement”), we pay to Remington, a subsidiary of AINC, a monthly hotel management fee equal to the greater of $14,000 (increased annually based on consumer price index adjustments) or 3% of gross revenues (the “base fee”) as well as annual incentive hotel management fees, if certain operational criteria are met and other general and administrative expense reimbursements. Under the original terms of the hotel management agreement, we paid Remington on the fifth day of each month for the base fees in the preceding month. Pursuant to the terms of the Letter Agreement dated March 13, 2020 (the “Hotel Management Letter Agreement”), in order to allow Remington to better manage its corporate working capital and to ensure the continued efficient operation of our hotels, we agreed to pay the base fee and to reimburse all expenses on a weekly basis for the preceding week, rather than on a monthly basis. The Letter Agreement went into effect on March 13, 2020 and will continue until terminated by us.

This summary description of the Hotel Management Letter Agreement is qualified in its entirety by the Hotel Management Letter Agreement, a copy of which is included as Exhibit 10.4 to this Report and is incorporated herein by reference.

Item 7.01. Regulation FD Disclosure.

Reduction in Base Salary of Executive Officers

On March 16, 2020, AINC announced that, in light of the uncertainty created by the effects of the COVID-19 novel coronavirus, the base salary paid by AINC for certain of our officers, including our Chief Executive Officer, Chief Financial Officer and our other named executive officers, will be temporarily reduced by 15%. These reductions will be effective until such time as AINC’s Chief Executive Officer, Mr. Monty J. Bennett, determines in his discretion that the effects of the COVID-19 novel coronavirus have subsided and it has been determined that the Company is in a healthy financial position. Any amounts relinquished pursuant to the temporary reduction may be paid by AINC in the future, as AINC’s Chief Executive Officer, Mr. Monty J. Bennett, determines in his discretion. The reductions in base salaries will be effective as of March 21, 2020.

Reduction in Annual Retainers for the Company’s Board of Directors

On March 16, 2020, the Company announced that, effective immediately, in light of the uncertainty created by the effects of the COVID-19 novel coronavirus, the annual cash retainer for each non-employee director serving on the Company’s Board of Directors will be temporarily reduced by 25%. This reduction will be effective until such time as the Board determines in its discretion that such effects of COVID-19 novel coronavirus have subsided. Any amounts relinquished pursuant to the temporary reduction in fees may be paid in the future, as determined by the Board in its discretion.

Dividend Policy

On March 16, 2020, the Company and its board of directors announced a suspension of its previously disclosed 2020 common stock dividend policy and that the Company will not pay a dividend on its common stock for the first quarter ended March 31, 2020. Our board of directors will continue to review our dividend policy and make future announcements with respect thereto.

On March 16, 2020, the Company issued a press release related to dividends for the first quarter ended March 31, 2020 which is Exhibit 99.1 to this Report.

Item 7.01 of this Current Report on Form 8-K is being furnished and shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934 or otherwise subject to liabilities of that Section.

Item 9.01. Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.		Description
10.1		Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement, dated as of June 26, 2018, among Ashford Hospitality Trust, Inc., Ashford Hospitality Limited Partnership, Ashford TRS Corporation, Ashford Inc. and Ashford Hospitality Advisors LLC, dated June, 26, 2018, incorporated by reference to Exhibit 10.1 of the Company’s Form 8-K filed on June 26, 2018 (File No. 001-36400)

10.2		Extension Agreement, dated March 13, 2020

10.3		Consolidated, Amended and Restated Hotel Master Management Agreement, dated August 8, 2018, by and among Ashford TRS Corporation, RI Manchester Tenant Corporation, CY Manchester Tenant Corporation and Remington Lodging & Hospitality, LLC (incorporated by reference to Exhibit 10.1 to the Registrant’s Form 8-K filed on August 14, 2018) (File No. 001-31775)

10.4		Hotel Management Letter Agreement, dated March 13, 2020

99.1		Press Release of the Company, dated March 16, 2020, furnished under Item 7.01

104		Cover Page Interactive Data File – the cover page XBRL tags are embedded within the Inline XBRL document

SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

	ASHFORD HOSPITALITY TRUST, INC.


	By:	/s/ Deric S. Eubanks
		Deric S. Eubanks
		Chief Financial Officer

Date: March 16, 2020

Exhibit 10.2

EXTENSION AGREEMENT

This extension agreement (the “Extension Agreement”) is entered into and effective as of March 13, 2020, by and among Ashford Hospitality Trust, Inc., a Maryland corporation (“Ashford Trust”), Ashford Hospitality Limited Partnership, a Delaware limited partnership (“Operating Partnership”), Ashford TRS Corporation, a Delaware corporation (“Ashford TRS”), Ashford Inc., a Nevada corporation (“Ashford Inc.”), and Ashford Hospitality Advisors LLC, a Delaware limited liability company (“Ashford LLC”). All capitalized terms not specifically defined herein shall have the meanings ascribed to them in that certain Enhanced Return Funding Program Agreement and Amendment No. 1 to the Amended and Restated Advisory Agreement dated effective as of June 26, 2018, by and among Ashford Trust, the Operating Partnership, Ashford TRS, Ashford Inc. and Ashford LLC (the “ERFP Agreement”). All capitalized terms herein that are not otherwise defined shall have the meanings ascribed to them in the ERFP Agreement.

WHEREAS, on November 30, 2018 and pursuant to the ERFP Agreement, the Operating Partnership delivered a written request to Ashford LLC requesting that Ashford LLC commit to fund an Enhanced Return Investment of $19,500,000 (the “ES Manhattan ERFP”) with respect the Operating Partnership’s intended purchase of the Embassy Suites Manhattan hotel (the “ES Manhattan Funding Commitment Request”);

WHEREAS, on December 5, 2018 and pursuant to the ERFP Agreement, in response to the ES Manhattan Funding Commitment Request, Ashford LLC delivered a Confirmation Notice to the Operating Partnership;

WHEREAS, a subsidiary of the Operating Partnership acquired the Embassy Suites Manhattan hotel on January 22, 2019;

WHEREAS, Section 2.01(c) of the ERFP Agreement provides that, subject to the terms of the ERFP Agreement, Ashford LLC shall fund the ES Manhattan ERFP on or before January 22, 2021 (the “ES Required FF&E Acquisition Date”); and

WHEREAS, the parties to the ERFP Agreement desire to waive the ES Required FF&E Acquisition Date and extend such date to December 31, 2022.

NOW THEREFORE, in consideration of the mutual covenants set forth in this Extension Agreement, and for other good and valuable consideration, the receipt and sufficiency of which is hereby acknowledged, and intending to be legally bound hereby, the parties hereby agree as follows:

Extension of ES Required FF&E Acquisition Date. The ES Required FF&E Acquisition Date is hereby waived and extended to December 31, 2022.

Governing Law; Consent to Jurisdiction. This Extension Agreement shall be governed by and construed in accordance with the laws of the State of Texas, without regard to the conflict of laws principals thereof. Each of the parties hereby irrevocably and unconditionally submits, for itself and its property, to the exclusive jurisdiction of any Texas state court, or federal court of the United States of America, in each case sitting in Dallas County, Texas, and any appellate court from any thereof, in any action, suit or proceeding arising out of or relating to this Extension Agreement.

Entire Agreement; Conflicts. This Extension Agreement reflects the entire understanding of the parties hereto with respect to the subject matter hereof and supersedes and replaces all agreements between the parties with respect to the subject matter hereof.

Amendment, Modifications and Waiver. This Extension Agreement shall not be altered or otherwise amended in any respect, except pursuant to an instrument in writing signed by the parties hereto.

Counterparts. This Extension Agreement may be executed in any number of counterparts, and each of such counterparts shall for all purposes be deemed to be an original, and all such counterparts shall together constitute but one and the same instrument. A signature to this Extension Agreement executed and/or transmitted electronically shall have the same authority, effect and enforceability as an original signature.

Descriptive Headings. Descriptive headings of the several Sections of this Extension Agreement are inserted for convenience only and shall not control or affect the meaning or construction of any of the provisions hereof.

IN WITNESS WHEREOF, the undersigned have executed this Extension Agreement as of the date first set forth above.

ASHFORD TRUST:

Ashford Hospitality Trust, Inc.

By:	/s/ Douglas A. Kessler
	Name:	Douglas A. Kessler
	Title:	President and Chief Executive Officer

OPERATING PARTNERSHIP:

Ashford Hospitality Limited Partnership

By:	Ashford OP General Partner LLC, its general partner

By:	/s/ Douglas A. Kessler
	Name:	Douglas A. Kessler
	Title:	President

ASHFORD TRS:

Ashford TRS Corporation

By:	/s/ Deric S. Eubanks
	Name:	Deric S. Eubanks
	Title:	President

ASHFORD INC.:

Ashford Inc.

By:	/s/ J. Robinson Hays
	Name:	J. Robison Hays
	Title:	Co-President and Chief Strategy Officer

ASHFORD LLC:

Ashford Hospitality Advisors LLC

By:	/s/ J. Robinson Hays
	Name:	J. Robison Hays
	Title:	Co-President and Chief Strategy Officer

Exhibit 10.4

March 13, 2020

Ashford TRS Corporation

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attention: Chief Financial Officer

Re:

Consolidated, Amended and Restated Hotel Master Management Agreement (the “Management Agreement”) dated August 8, 2018, by and among Ashford TRS Corporation, RI Manchester Tenant Corporation, CY Manchester Corporation (collectively, “Owner”) and Remington Lodging & Hospitality, LLC

To the Chief Financial Officer:

Capitalized terms used, but not defined, herein shall have the meanings given to them in the Management Agreement.

With regard to each Hotel that is subject to the Management Agreement, Section 16.01 of the Management Agreement provides that Manager shall be paid its monthly Base Management Fee on the fifth (5^th) day of each month for the preceding Accounting Period. As you are no doubt aware, the spread of the novel coronavirus (Covid-19) is having a significant impact on the travel and hospitality industry. In order for Manager to better manage its corporate working capital to ensure the continued efficient operation of the Hotels, we request that you agree to permit: (i) payment of the Base Management Fee to Manager; and (ii) reimbursement to Manager of all expenses for which Manager is entitled to be reimbursed under the Management Agreement, in each case, on a weekly rather than monthly basis (the “Proposal”). If approved, the timing of payments contemplated by the Proposal will begin immediately and will continue until terminated by Owner.

Please indicate your agreement to the Proposal by your signature below. Should you have any questions, please do not hesitate to contact me.

	REMINGTON lodging & hospitality, llc, a Delaware limited liability company, on behalf of itself and its affiliates who manage Hotels under the Management Agreement

	By:	/s/ Sloan Dean
	Name:	Sloan Dean
	Title:	Chief Executive Officer

APPROVED AND AGREED:

Ashford TRS Corporation, on behalf of itself and

all New Lessees under the Management Agreement,

hereby agrees to Proposal

ASHFORD TRS CORPORATION


By:	/s/ Deric Eubanks
Name:	Deric Eubanks
Title:	President

cc:

Ashford Hospitality Limited Partnership

14185 Dallas Parkway, Suite 1100

Dallas, Texas 75254

Attention: General Counsel

Exhibit 99.1

NEWS RELEASE

Contact:	Deric Eubanks	Jordan Jennings	Joseph Calabrese
	Chief Financial Officer	Investor Relations	Financial Relations Board
	(972) 490-9600	(972) 778-9487	(212) 827-3772

Ashford Trust Declares PREFERRED Dividends For FIRST QUARTER OF 2020

DALLAS, March 16, 2020 -- Ashford Hospitality Trust, Inc. (NYSE: AHT) (“Ashford Trust” or the “Company”) announced today that its Board of Directors declared a dividend of $0.5281 per diluted share for the Company’s 8.45% Series D Cumulative Preferred Stock for the first quarter ending March 31, 2020. The dividend, which equates to an annual rate of $2.1125 per share, is payable on April 15, 2020, to shareholders of record as of March 31, 2020.

The Board declared a dividend of $0.4609 per diluted share for the Company’s 7.375% Series F Cumulative Preferred Stock for the first quarter ending March 31, 2020. The dividend, which equates to an annual rate of $1.8438 per share, is payable on April 15, 2020, to shareholders of record as of March 31, 2020.

The Board declared a dividend of $0.4609 per diluted share for the Company’s 7.375% Series G Cumulative Preferred Stock for the first quarter ending March 31, 2020. The dividend, which equates to an annual rate of $1.8438 per share, is payable on April 15, 2020, to shareholders of record as of March 31, 2020.

The Board declared a dividend of $0.46875 per diluted share for the Company’s 7.50% Series H Cumulative Preferred Stock for the first quarter ending March 31, 2020. The dividend, which equates to an annual rate of $1.875 per share, is payable on April 15, 2020, to shareholders of record as of March 31, 2020.

The Board declared a dividend of $0.46875 per diluted share for the Company’s 7.50% Series I Cumulative Preferred Stock for the first quarter ending March 31, 2020. The dividend, which equates to an annual rate of $1.875 per share, is payable on April 15, 2020, to shareholders of record as of March 31, 2020.

-MORE-

The Company and its Board announced a suspension of its previously announced 2020 common stock dividend policy and that the Company will not pay a dividend on the common stock for the first quarter ending March 31, 2020. The Board will continue to monitor the situation and assess future quarterly common dividend declarations.

* * * * *

Ashford Hospitality Trust is a real estate investment trust (REIT) focused on investing predominantly in upper upscale, full-service hotels.

Ashford has created an Ashford App for the hospitality REIT investor community. The Ashford App is available for free download at Apple’s App Store and the Google Play Store by searching “Ashford.”

Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. Forward-looking statements in this press release include, among others, statements about the Company’s strategy and future plans. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford Trust’s control.

These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: the impact of the novel strain of coronavirus (COVID-19) on our business; general volatility of the capital markets and the market price of our common stock and preferred stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy; and the degree and nature of our competition. These and other risk factors are more fully discussed in Ashford Trust’s filings with the Securities and Exchange Commission.

The forward-looking statements included in this press release are only made as of the date of this press release. Investors should not place undue reliance on these forward-looking statements. We will not publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise except to the extent required by law.