þ
|
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
¨
|
TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
|
Maryland
|
|
46-2488594
|
(State or other jurisdiction of incorporation or organization)
|
|
(IRS employer identification number)
|
|
|
|
14185 Dallas Parkway, Suite 1100
|
|
|
Dallas, Texas
|
|
75254
|
(Address of principal executive offices)
|
|
(Zip code)
|
Large accelerated filer
|
¨
|
|
Accelerated filer
|
þ
|
Non-accelerated filer
|
¨
|
(Do not check if a smaller reporting company)
|
Smaller reporting company
|
¨
|
|
|
|
Emerging growth company
|
þ
|
Common Stock, $0.01 par value per share
|
|
31,952,536
|
(Class)
|
|
Outstanding at August 4, 2017
|
|
|
|
|
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
ASSETS
|
|
|
|
|
||||
Investments in hotel properties, gross
|
|
$
|
1,518,286
|
|
|
$
|
1,258,412
|
|
Accumulated depreciation
|
|
(265,807
|
)
|
|
(243,880
|
)
|
||
Investments in hotel properties, net
|
|
1,252,479
|
|
|
1,014,532
|
|
||
Cash and cash equivalents
|
|
129,675
|
|
|
126,790
|
|
||
Restricted cash
|
|
34,793
|
|
|
37,855
|
|
||
Accounts receivable, net of allowance of $92 and $96, respectively
|
|
18,607
|
|
|
18,194
|
|
||
Inventories
|
|
1,780
|
|
|
1,479
|
|
||
Note receivable
|
|
8,098
|
|
|
8,098
|
|
||
Deferred costs, net
|
|
835
|
|
|
1,020
|
|
||
Prepaid expenses
|
|
5,764
|
|
|
3,669
|
|
||
Investment in Ashford Inc., at fair value
|
|
9,935
|
|
|
8,407
|
|
||
Derivative assets
|
|
218
|
|
|
1,149
|
|
||
Other assets
|
|
5,542
|
|
|
2,249
|
|
||
Intangible assets, net
|
|
22,684
|
|
|
22,846
|
|
||
Due from Ashford Trust OP, net
|
|
—
|
|
|
488
|
|
||
Due from AQUA U.S. Fund
|
|
—
|
|
|
2,289
|
|
||
Due from related party, net
|
|
321
|
|
|
377
|
|
||
Due from third-party hotel managers
|
|
8,227
|
|
|
7,555
|
|
||
Total assets
|
|
$
|
1,498,958
|
|
|
$
|
1,256,997
|
|
LIABILITIES AND EQUITY
|
|
|
|
|
||||
Liabilities:
|
|
|
|
|
||||
Indebtedness, net
|
|
$
|
907,002
|
|
|
$
|
764,616
|
|
Accounts payable and accrued expenses
|
|
54,604
|
|
|
44,791
|
|
||
Dividends and distributions payable
|
|
8,356
|
|
|
5,038
|
|
||
Due to Ashford Trust OP, net
|
|
1
|
|
|
—
|
|
||
Due to Ashford Inc.
|
|
3,889
|
|
|
5,085
|
|
||
Due to affiliate
|
|
—
|
|
|
2,500
|
|
||
Due to third-party hotel managers
|
|
2,583
|
|
|
973
|
|
||
Intangible liability, net
|
|
3,597
|
|
|
3,625
|
|
||
Other liabilities
|
|
1,520
|
|
|
1,432
|
|
||
Total liabilities
|
|
981,552
|
|
|
828,060
|
|
||
Commitments and contingencies (note 15)
|
|
|
|
|
||||
5.50% Series B cumulative convertible preferred stock, $0.01 par value, 4,965,850 and 2,890,850 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively
|
|
106,129
|
|
|
65,960
|
|
||
Redeemable noncontrolling interests in operating partnership
|
|
47,550
|
|
|
59,544
|
|
||
Equity:
|
|
|
|
|
||||
Common stock, $0.01 par value, 200,000,000 shares authorized, 31,952,536 and 26,021,552 shares issued and outstanding at June 30, 2017 and December 31, 2016, respectively
|
|
319
|
|
|
260
|
|
||
Additional paid-in capital
|
|
467,866
|
|
|
401,790
|
|
||
Accumulated deficit
|
|
(99,060
|
)
|
|
(93,254
|
)
|
||
Total stockholders’ equity of the Company
|
|
369,125
|
|
|
308,796
|
|
||
Noncontrolling interest in consolidated entity
|
|
(5,398
|
)
|
|
(5,363
|
)
|
||
Total equity
|
|
363,727
|
|
|
303,433
|
|
||
Total liabilities and equity
|
|
$
|
1,498,958
|
|
|
$
|
1,256,997
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
REVENUE
|
|
|
|
|
|
|
|
||||||||
Rooms
|
$
|
79,449
|
|
|
$
|
79,583
|
|
|
$
|
146,867
|
|
|
$
|
148,834
|
|
Food and beverage
|
27,980
|
|
|
27,051
|
|
|
52,453
|
|
|
51,916
|
|
||||
Other
|
8,626
|
|
|
5,761
|
|
|
13,991
|
|
|
11,409
|
|
||||
Total hotel revenue
|
116,055
|
|
|
112,395
|
|
|
213,311
|
|
|
212,159
|
|
||||
Other
|
37
|
|
|
37
|
|
|
77
|
|
|
70
|
|
||||
Total revenue
|
116,092
|
|
|
112,432
|
|
|
213,388
|
|
|
212,229
|
|
||||
EXPENSES
|
|
|
|
|
|
|
|
||||||||
Hotel operating expenses:
|
|
|
|
|
|
|
|
||||||||
Rooms
|
17,613
|
|
|
17,096
|
|
|
33,410
|
|
|
32,915
|
|
||||
Food and beverage
|
19,263
|
|
|
18,267
|
|
|
36,124
|
|
|
35,712
|
|
||||
Other expenses
|
32,021
|
|
|
30,335
|
|
|
59,752
|
|
|
58,674
|
|
||||
Management fees
|
4,209
|
|
|
4,331
|
|
|
7,754
|
|
|
8,138
|
|
||||
Total hotel expenses
|
73,106
|
|
|
70,029
|
|
|
137,040
|
|
|
135,439
|
|
||||
Property taxes, insurance and other
|
5,370
|
|
|
4,514
|
|
|
10,444
|
|
|
9,557
|
|
||||
Depreciation and amortization
|
13,469
|
|
|
11,263
|
|
|
25,440
|
|
|
23,167
|
|
||||
Advisory services fee
|
3,143
|
|
|
5,835
|
|
|
4,008
|
|
|
7,899
|
|
||||
Contract modification cost
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
||||
Transaction costs
|
2,066
|
|
|
438
|
|
|
6,394
|
|
|
438
|
|
||||
Corporate general and administrative
|
1,531
|
|
|
9,838
|
|
|
5,405
|
|
|
13,761
|
|
||||
Total expenses
|
103,685
|
|
|
101,917
|
|
|
193,731
|
|
|
190,261
|
|
||||
OPERATING INCOME (LOSS)
|
12,407
|
|
|
10,515
|
|
|
19,657
|
|
|
21,968
|
|
||||
Equity in earnings (loss) of unconsolidated entity
|
—
|
|
|
63
|
|
|
—
|
|
|
(2,587
|
)
|
||||
Interest income
|
165
|
|
|
50
|
|
|
277
|
|
|
82
|
|
||||
Other income (expense)
|
(113
|
)
|
|
—
|
|
|
(270
|
)
|
|
(10
|
)
|
||||
Interest expense and amortization of loan costs
|
(9,931
|
)
|
|
(10,637
|
)
|
|
(18,133
|
)
|
|
(21,271
|
)
|
||||
Write-off of loan costs and exit fees
|
—
|
|
|
—
|
|
|
(1,963
|
)
|
|
—
|
|
||||
Unrealized gain (loss) on investment in Ashford Inc.
|
(1,563
|
)
|
|
860
|
|
|
1,528
|
|
|
(633
|
)
|
||||
Unrealized gain (loss) on derivatives
|
(100
|
)
|
|
2,597
|
|
|
(998
|
)
|
|
6,130
|
|
||||
INCOME (LOSS) BEFORE INCOME TAXES
|
865
|
|
|
3,448
|
|
|
98
|
|
|
3,679
|
|
||||
Income tax (expense) benefit
|
(479
|
)
|
|
(1,156
|
)
|
|
(1
|
)
|
|
(1,526
|
)
|
||||
NET INCOME (LOSS)
|
386
|
|
|
2,292
|
|
|
97
|
|
|
2,153
|
|
||||
(Income) loss from consolidated entities attributable to noncontrolling interests
|
(1,614
|
)
|
|
80
|
|
|
(1,593
|
)
|
|
(65
|
)
|
||||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership
|
343
|
|
|
(184
|
)
|
|
598
|
|
|
(34
|
)
|
||||
NET INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY
|
(885
|
)
|
|
2,188
|
|
|
(898
|
)
|
|
2,054
|
|
||||
Preferred dividends
|
(1,707
|
)
|
|
(978
|
)
|
|
(3,380
|
)
|
|
(1,872
|
)
|
||||
NET INCOME (LOSS) ATTRIBUTABLE TO COMMON STOCKHOLDERS
|
$
|
(2,592
|
)
|
|
$
|
1,210
|
|
|
$
|
(4,278
|
)
|
|
$
|
182
|
|
INCOME (LOSS) PER SHARE - BASIC:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
(0.09
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
Weighted average common shares outstanding – basic
|
31,469
|
|
|
27,916
|
|
|
29,380
|
|
|
28,121
|
|
||||
INCOME (LOSS) PER SHARE - DILUTED:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to common stockholders
|
$
|
(0.09
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
Weighted average common shares outstanding – diluted
|
31,469
|
|
|
32,418
|
|
|
29,380
|
|
|
28,224
|
|
||||
Dividends declared per common share
|
$
|
0.16
|
|
|
$
|
0.12
|
|
|
$
|
0.32
|
|
|
$
|
0.22
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
NET INCOME (LOSS)
|
$
|
386
|
|
|
$
|
2,292
|
|
|
$
|
97
|
|
|
$
|
2,153
|
|
OTHER COMPREHENSIVE INCOME (LOSS), NET OF TAX
|
|
|
|
|
|
|
|
||||||||
Total other comprehensive income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
TOTAL COMPREHENSIVE INCOME (LOSS)
|
386
|
|
|
2,292
|
|
|
97
|
|
|
2,153
|
|
||||
Comprehensive (income) loss attributable to noncontrolling interests in consolidated entities
|
(1,614
|
)
|
|
80
|
|
|
(1,593
|
)
|
|
(65
|
)
|
||||
Comprehensive (income) loss attributable to redeemable noncontrolling interests in operating partnership
|
343
|
|
|
(184
|
)
|
|
598
|
|
|
(34
|
)
|
||||
COMPREHENSIVE INCOME (LOSS) ATTRIBUTABLE TO THE COMPANY
|
$
|
(885
|
)
|
|
$
|
2,188
|
|
|
$
|
(898
|
)
|
|
$
|
2,054
|
|
|
Common Stock
|
|
Additional
Paid-in Capital |
|
Accumulated Deficit
|
|
Noncontrolling
Interest in
Consolidated
Entities
|
|
Total
|
|
Redeemable Noncontrolling Interests in Operating Partnership
|
|||||||||||||||
|
Shares
|
|
Amount
|
|
|
|
|
|||||||||||||||||||
Balance at January 1, 2017
|
26,022
|
|
|
$
|
260
|
|
|
$
|
401,790
|
|
|
$
|
(93,254
|
)
|
|
$
|
(5,363
|
)
|
|
$
|
303,433
|
|
|
$
|
59,544
|
|
Purchase of common stock
|
(17
|
)
|
|
—
|
|
|
(194
|
)
|
|
—
|
|
|
—
|
|
|
(194
|
)
|
|
—
|
|
||||||
Equity-based compensation
|
—
|
|
|
—
|
|
|
(204
|
)
|
|
—
|
|
|
—
|
|
|
(204
|
)
|
|
(867
|
)
|
||||||
Issuance of common stock
|
5,750
|
|
|
57
|
|
|
66,394
|
|
|
—
|
|
|
—
|
|
|
66,451
|
|
|
—
|
|
||||||
Issuance of restricted shares/units
|
195
|
|
|
2
|
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
21
|
|
||||||
Forfeiture of restricted common shares
|
(3
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Dividends declared – common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(10,347
|
)
|
|
—
|
|
|
(10,347
|
)
|
|
—
|
|
||||||
Dividends declared – preferred stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,380
|
)
|
|
—
|
|
|
(3,380
|
)
|
|
—
|
|
||||||
Distributions to noncontrolling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,628
|
)
|
|
(1,628
|
)
|
|
(1,649
|
)
|
||||||
Redemption/conversion of operating partnership units
|
6
|
|
|
—
|
|
|
82
|
|
|
—
|
|
|
—
|
|
|
82
|
|
|
(82
|
)
|
||||||
Net income (loss)
|
—
|
|
|
—
|
|
|
—
|
|
|
(898
|
)
|
|
1,593
|
|
|
695
|
|
|
(598
|
)
|
||||||
Redemption value adjustment
|
—
|
|
|
—
|
|
|
—
|
|
|
8,819
|
|
|
—
|
|
|
8,819
|
|
|
(8,819
|
)
|
||||||
Balance at June 30, 2017
|
31,953
|
|
|
$
|
319
|
|
|
$
|
467,866
|
|
|
$
|
(99,060
|
)
|
|
$
|
(5,398
|
)
|
|
$
|
363,727
|
|
|
$
|
47,550
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
CASH FLOWS FROM OPERATING ACTIVITIES
|
|
|
|
||||
Net income (loss)
|
$
|
97
|
|
|
$
|
2,153
|
|
Adjustments to reconcile net income (loss) to net cash flows provided by (used in) operating activities:
|
|
|
|
||||
Depreciation and amortization
|
25,440
|
|
|
23,167
|
|
||
Equity-based compensation
|
(1,071
|
)
|
|
2,306
|
|
||
Bad debt expense
|
128
|
|
|
91
|
|
||
Amortization of loan costs
|
2,398
|
|
|
1,639
|
|
||
Write-off of loan costs and exit fees
|
1,963
|
|
|
—
|
|
||
Amortization of intangibles
|
93
|
|
|
27
|
|
||
Unrealized (gain) loss on investment in Ashford Inc.
|
(1,528
|
)
|
|
633
|
|
||
Realized and unrealized (gain) loss on derivatives
|
1,269
|
|
|
(6,130
|
)
|
||
Equity in (earnings) loss of unconsolidated entity
|
—
|
|
|
2,587
|
|
||
Deferred tax expense (benefit)
|
(216
|
)
|
|
135
|
|
||
Payments for derivatives
|
—
|
|
|
(114
|
)
|
||
Changes in operating assets and liabilities, exclusive of the effect of hotel acquisitions:
|
|
|
|
||||
Accounts receivable and inventories
|
2,422
|
|
|
(4,624
|
)
|
||
Prepaid expenses and other assets
|
(2,358
|
)
|
|
(3,218
|
)
|
||
Accounts payable and accrued expenses
|
92
|
|
|
14,046
|
|
||
Due to/from related party, net
|
56
|
|
|
(182
|
)
|
||
Due to affiliate
|
(2,500
|
)
|
|
—
|
|
||
Due to/from third-party hotel managers
|
5,013
|
|
|
(703
|
)
|
||
Due to/from Ashford Trust OP, net
|
489
|
|
|
(513
|
)
|
||
Due to/from Ashford Inc.
|
(1,271
|
)
|
|
1,827
|
|
||
Other liabilities
|
88
|
|
|
116
|
|
||
Net cash provided by (used in) operating activities
|
30,604
|
|
|
33,243
|
|
||
|
|
|
|
||||
CASH FLOWS FROM INVESTING ACTIVITIES
|
|
|
|
||||
Acquisition of hotel properties, net of cash and restricted cash acquired
|
(243,666
|
)
|
|
—
|
|
||
Proceeds from liquidation of AQUA U.S. Fund
|
2,289
|
|
|
43,489
|
|
||
Improvements and additions to hotel properties
|
(21,740
|
)
|
|
(6,947
|
)
|
||
Net cash provided by (used in) investing activities
|
(263,117
|
)
|
|
36,542
|
|
||
|
|
|
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES
|
|
|
|
||||
Borrowings on indebtedness
|
483,500
|
|
|
—
|
|
||
Repayments of indebtedness
|
(335,458
|
)
|
|
(4,252
|
)
|
||
Payments of loan costs and exit fees
|
(9,832
|
)
|
|
(20
|
)
|
||
Payments for derivatives
|
(338
|
)
|
|
(4
|
)
|
||
Purchase of common stock
|
(119
|
)
|
|
(24,705
|
)
|
||
Payments for dividends and distributions
|
(12,058
|
)
|
|
(7,582
|
)
|
||
Issuance of preferred stock
|
40,169
|
|
|
4,387
|
|
||
Issuance of common stock
|
66,451
|
|
|
—
|
|
||
Distributions to a noncontrolling interest in a consolidated entity
|
—
|
|
|
(3,766
|
)
|
||
Other
|
21
|
|
|
19
|
|
||
Net cash provided by (used in) financing activities
|
232,336
|
|
|
(35,923
|
)
|
||
Net change in cash, cash equivalents and restricted cash
|
(177
|
)
|
|
33,862
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
164,645
|
|
|
138,174
|
|
||
Cash held for sale at end of period
|
—
|
|
|
(30
|
)
|
||
Restricted cash held for sale at end of period
|
—
|
|
|
(1,640
|
)
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
164,468
|
|
|
$
|
170,366
|
|
|
|
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
SUPPLEMENTAL CASH FLOW INFORMATION
|
|
|
|
||||
Interest paid
|
$
|
16,134
|
|
|
$
|
19,645
|
|
Income taxes paid
|
929
|
|
|
348
|
|
||
SUPPLEMENTAL DISCLOSURE OF NON-CASH INVESTING AND FINANCING ACTIVITIES
|
|
|
|
||||
Common stock purchases accrued but not paid
|
—
|
|
|
5,457
|
|
||
Dividends and distributions declared but not paid
|
8,356
|
|
|
4,962
|
|
||
Capital expenditures accrued but not paid
|
1,498
|
|
|
734
|
|
||
Distributions declared but not paid to a noncontrolling interest in a consolidated entity
|
1,628
|
|
|
—
|
|
||
Receivable related to liquidation of AQUA U.S. Fund
|
—
|
|
|
2,289
|
|
||
Accrued common stock offering expense
|
—
|
|
|
201
|
|
||
Accrued preferred stock offering expenses
|
—
|
|
|
479
|
|
||
SUPPLEMENTAL DISCLOSURE OF CASH, CASH EQUIVALENTS AND RESTRICTED CASH
|
|
|
|
||||
Cash and cash equivalents at beginning of period
|
$
|
126,790
|
|
|
$
|
105,039
|
|
Restricted cash at beginning of period
|
37,855
|
|
|
33,135
|
|
||
Cash, cash equivalents and restricted cash at beginning of period
|
$
|
164,645
|
|
|
$
|
138,174
|
|
|
|
|
|
||||
Cash and cash equivalents at end of period
|
$
|
129,675
|
|
|
$
|
130,014
|
|
Cash and cash equivalents at end of period included in assets held for sale
|
—
|
|
|
30
|
|
||
Restricted cash at end of period
|
34,793
|
|
|
40,352
|
|
||
Restricted cash at end of period included in assets held for sale
|
—
|
|
|
1,640
|
|
||
Cash, cash equivalents and restricted cash at end of period
|
$
|
164,468
|
|
|
$
|
172,036
|
|
•
|
Historical seasonality patterns at some of our properties cause fluctuations in our overall operating results. Consequently, operating results for the
three and six
months ended
June 30, 2017
, are not necessarily indicative of the results that may be expected for the year ending December 31, 2017.
|
•
|
On July 1, 2016, we sold the Courtyard Seattle Downtown.
|
•
|
On March 31, 2017, we acquired the Park Hyatt Beaver Creek Resort & Spa, and on May 11, 2017, we acquired the Hotel Yountville. The operating results of these hotel properties have been included in our results of operations as of their acquisition dates.
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Land
|
|
$
|
347,662
|
|
|
$
|
210,696
|
|
Buildings and improvements
|
|
1,071,359
|
|
|
972,412
|
|
||
Furniture, fixtures and equipment
|
|
93,400
|
|
|
70,922
|
|
||
Construction in progress
|
|
5,865
|
|
|
4,382
|
|
||
Total cost
|
|
1,518,286
|
|
|
1,258,412
|
|
||
Accumulated depreciation
|
|
(265,807
|
)
|
|
(243,880
|
)
|
||
Investments in hotel properties, net
|
|
$
|
1,252,479
|
|
|
$
|
1,014,532
|
|
|
Preliminary Allocations as of March 31, 2017
|
|
Adjustments
|
|
Final Allocations as of June 30, 2017
|
||||||
Land
|
$
|
92,470
|
|
|
$
|
(3,353
|
)
|
|
$
|
89,117
|
|
Buildings and improvements
|
47,724
|
|
|
3,545
|
|
|
51,269
|
|
|||
Furniture, fixtures and equipment
|
5,306
|
|
|
(192
|
)
|
|
5,114
|
|
|||
|
$
|
145,500
|
|
|
$
|
—
|
|
|
$
|
145,500
|
|
Net other assets (liabilities)
|
$
|
4,528
|
|
|
$
|
(721
|
)
|
|
$
|
3,807
|
|
Land
|
$
|
47,849
|
|
Buildings and improvements
|
41,216
|
|
|
Furniture, fixtures and equipment
|
7,351
|
|
|
|
96,416
|
|
|
Inventories
|
84
|
|
|
|
96,500
|
|
|
|
|
||
Net other assets (liabilities)
|
$
|
(2,141
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total revenue
|
$
|
117,662
|
|
|
$
|
121,418
|
|
|
$
|
236,474
|
|
|
$
|
242,138
|
|
Net income (loss)
|
1,936
|
|
|
1,352
|
|
|
9,509
|
|
|
6,054
|
|
||||
Net income (loss) attributable to common stockholders
|
(1,223
|
)
|
|
394
|
|
|
3,921
|
|
|
3,590
|
|
||||
Pro Forma income per share:
|
|
|
|
|
|
|
|
||||||||
Basic
|
$
|
(0.04
|
)
|
|
$
|
0.01
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
Diluted
|
$
|
(0.04
|
)
|
|
$
|
0.01
|
|
|
$
|
0.12
|
|
|
$
|
0.12
|
|
Weighted average common shares outstanding (in thousands):
|
|
|
|
|
|
|
|
||||||||
Basic
|
31,469
|
|
|
27,916
|
|
|
29,380
|
|
|
28,121
|
|
||||
Diluted
|
31,469
|
|
|
28,005
|
|
|
29,553
|
|
|
32,812
|
|
|
Three Months Ended
|
|
Six Months Ended
|
||||
|
June 30, 2016
|
|
June 30, 2016
|
||||
Total hotel revenue
|
$
|
4,808
|
|
|
$
|
7,995
|
|
Total hotel operating expenses
|
(2,704
|
)
|
|
(4,462
|
)
|
||
Operating income (loss)
|
2,104
|
|
|
3,533
|
|
||
Property taxes, insurance and other
|
(167
|
)
|
|
(330
|
)
|
||
Depreciation and amortization
|
(295
|
)
|
|
(834
|
)
|
||
Interest expense and amortization of loan costs
|
(862
|
)
|
|
(1,709
|
)
|
||
Income (loss) before income taxes
|
780
|
|
|
660
|
|
||
(Income) loss before income taxes attributable to redeemable noncontrolling interests in operating partnership
|
(102
|
)
|
|
(87
|
)
|
||
Income (loss) before income taxes attributable to the Company
|
$
|
678
|
|
|
$
|
573
|
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Total assets
|
|
$
|
79,465
|
|
|
$
|
129,797
|
|
Total liabilities
|
|
45,003
|
|
|
38,168
|
|
||
Redeemable noncontrolling interests
|
|
1,766
|
|
|
1,480
|
|
||
Total stockholders’ equity of Ashford Inc.
|
|
32,093
|
|
|
37,377
|
|
||
Noncontrolling interests in consolidated entities
|
|
603
|
|
|
52,772
|
|
||
Total equity
|
|
32,696
|
|
|
90,149
|
|
||
Total liabilities and equity
|
|
$
|
79,465
|
|
|
$
|
129,797
|
|
Our investment in Ashford Inc., at fair value
|
|
$
|
9,935
|
|
|
$
|
8,407
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Total revenue
|
|
$
|
19,639
|
|
|
$
|
18,152
|
|
|
$
|
32,652
|
|
|
$
|
31,561
|
|
Total operating expenses
|
|
(18,221
|
)
|
|
(20,344
|
)
|
|
(33,370
|
)
|
|
(34,265
|
)
|
||||
Operating income (loss)
|
|
1,418
|
|
|
(2,192
|
)
|
|
(718
|
)
|
|
(2,704
|
)
|
||||
Realized and unrealized gain (loss) on investment in unconsolidated entity
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,460
|
)
|
||||
Realized and unrealized gain (loss) on investments
|
|
(16
|
)
|
|
236
|
|
|
(91
|
)
|
|
(5,448
|
)
|
||||
Other
|
|
10
|
|
|
22
|
|
|
128
|
|
|
(80
|
)
|
||||
Income tax (expense) benefit
|
|
(8,643
|
)
|
|
655
|
|
|
(9,273
|
)
|
|
15
|
|
||||
Net income (loss)
|
|
(7,231
|
)
|
|
(1,279
|
)
|
|
(9,954
|
)
|
|
(9,677
|
)
|
||||
(Income) loss from consolidated entities attributable to noncontrolling interests
|
|
190
|
|
|
(182
|
)
|
|
165
|
|
|
6,366
|
|
||||
Net (income) loss attributable to redeemable noncontrolling interests
|
|
332
|
|
|
355
|
|
|
695
|
|
|
473
|
|
||||
Net income (loss) attributable to Ashford Inc.
|
|
$
|
(6,709
|
)
|
|
$
|
(1,106
|
)
|
|
$
|
(9,094
|
)
|
|
$
|
(2,838
|
)
|
Our unrealized gain (loss) on investment in Ashford Inc.
|
|
$
|
(1,563
|
)
|
|
$
|
860
|
|
|
$
|
1,528
|
|
|
$
|
(633
|
)
|
Indebtedness
|
|
Collateral
|
|
Maturity
|
|
Interest Rate
|
|
June 30, 2017
|
|
December 31, 2016
|
||||
Secured revolving credit facility
(3)
|
|
None
|
|
November 2019
|
|
Base Rate
(2)
+ 1.25% to 2.50% or LIBOR
(1)
+ 2.25% to 3.50%
|
|
$
|
—
|
|
|
$
|
—
|
|
Mortgage loan
(10)
|
|
3 hotels
|
|
April 2017
|
|
5.95%
|
|
—
|
|
|
245,307
|
|
||
Mortgage loan
(10)
|
|
1 hotel
|
|
April 2017
|
|
5.95%
|
|
—
|
|
|
55,915
|
|
||
Mortgage loan
(7) (10)
|
|
1 hotel
|
|
April 2017
|
|
5.91%
|
|
—
|
|
|
32,879
|
|
||
Mortgage loan
(6)
|
|
1 hotel
|
|
December 2017
|
|
LIBOR
(1)
+ 4.95%
|
|
42,000
|
|
|
42,000
|
|
||
Mortgage loan
(6)
|
|
1 hotel
|
|
December 2017
|
|
LIBOR
(1)
+ 4.95%
|
|
40,000
|
|
|
40,000
|
|
||
Mortgage loan
(4)
|
|
1 hotel
|
|
March 2018
|
|
LIBOR
(1)
+ 2.30%
|
|
80,000
|
|
|
80,000
|
|
||
Mortgage loan
(5)
|
|
1 hotel
|
|
March 2018
|
|
LIBOR
(1)
+ 2.25%
|
|
70,000
|
|
|
70,000
|
|
||
TIF loan
(7)
(8)
|
|
1 hotel
|
|
June 2018
|
|
12.85%
|
|
8,098
|
|
|
8,098
|
|
||
Mortgage loan
(7) (10)
|
|
5 hotels
|
|
February 2019
|
|
LIBOR
(1)
+ 2.58%
|
|
365,000
|
|
|
—
|
|
||
Mortgage loan
(6)
|
|
1 hotel
|
|
April 2019
|
|
LIBOR
(1)
+ 2.75%
|
|
67,500
|
|
|
—
|
|
||
Mortgage loan
(9)
|
|
2 hotels
|
|
November 2019
|
|
LIBOR
(1)
+ 2.65%
|
|
191,408
|
|
|
192,765
|
|
||
Mortgage loan
|
|
1 hotel
|
|
May 2022
|
|
LIBOR
(1)
+ 2.55%
|
|
51,000
|
|
|
—
|
|
||
|
|
|
|
|
|
|
|
915,006
|
|
|
766,964
|
|
||
Deferred loan costs, net
|
|
|
|
|
|
|
|
(8,004
|
)
|
|
(2,348
|
)
|
||
Indebtedness, net
|
|
|
|
|
|
|
|
$
|
907,002
|
|
|
$
|
764,616
|
|
(1)
|
LIBOR rates were
1.224%
and
0.772%
at
June 30, 2017
and
December 31, 2016
, respectively.
|
(2)
|
Base Rate, as defined in the secured revolving credit facility agreement, is the greater of (i) the prime rate set by Bank of America, (ii) federal funds rate +
0.5%
, or (iii) LIBOR +
1.0%
.
|
(3)
|
Our borrowing capacity under our secured revolving credit facility is
$100.0 million
. We have an option, subject to lender approval, to further increase the borrowing capacity to an aggregate of
$250.0 million
. We may use up to
$15.0 million
for standby letters of credit. The secured revolving credit facility has
two
one
-year extension options subject to advance notice, satisfaction of certain conditions and a
0.25%
extension fee.
|
(4)
|
This loan has
three
one
-year extension options, subject to satisfaction of certain conditions, of which the second was exercised in March 2017.
|
(5)
|
This loan has
three
one
-year extension options, subject to satisfaction of certain conditions, of which the first was exercised in March 2017.
|
(6)
|
This loan has
three
one
-year extension options, subject to satisfaction of certain conditions.
|
(7)
|
These loans are collateralized by the same property.
|
(8)
|
The interest expense from the TIF loan is offset against interest income recorded on the note receivable of the same amount. See note 5.
|
(9)
|
This loan has
two
one
-year extension options, subject to satisfaction of certain conditions.
|
(10)
|
On January 18, 2017, we refinanced
three
mortgage loans totaling
$333.7 million
set to mature in April 2017 with a new
$365.0 million
loan with a
two
-year initial term and
five
one
-year extension options subject to the satisfaction of certain conditions. The new loan is interest only and bears interest at a rate of LIBOR +
2.58%
.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss) attributable to common stockholders - basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) attributable to the Company
|
$
|
(885
|
)
|
|
$
|
2,188
|
|
|
$
|
(898
|
)
|
|
$
|
2,054
|
|
Less: Dividends on preferred stock
|
(1,707
|
)
|
|
(978
|
)
|
|
(3,380
|
)
|
|
(1,872
|
)
|
||||
Less: Dividends on common stock
|
(5,036
|
)
|
|
(3,140
|
)
|
|
(10,069
|
)
|
|
(5,977
|
)
|
||||
Less: Dividends on unvested performance stock units
|
(86
|
)
|
|
(19
|
)
|
|
(153
|
)
|
|
(54
|
)
|
||||
Less: Dividends on unvested restricted shares
|
(75
|
)
|
|
(13
|
)
|
|
(125
|
)
|
|
(22
|
)
|
||||
Undistributed net income (loss) allocated to common stockholders
|
(7,789
|
)
|
|
(1,962
|
)
|
|
(14,625
|
)
|
|
(5,871
|
)
|
||||
Add back: Dividends on common stock
|
5,036
|
|
|
3,140
|
|
|
10,069
|
|
|
5,977
|
|
||||
Distributed and undistributed net income (loss) - basic and diluted
|
$
|
(2,753
|
)
|
|
$
|
1,178
|
|
|
$
|
(4,556
|
)
|
|
$
|
106
|
|
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership
|
—
|
|
|
184
|
|
|
—
|
|
|
—
|
|
||||
Distributed and undistributed net income (loss) - diluted
|
$
|
(2,753
|
)
|
|
$
|
1,362
|
|
|
$
|
(4,556
|
)
|
|
$
|
106
|
|
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding:
|
|
|
|
|
|
|
|
||||||||
Weighted average common shares outstanding – basic and diluted
|
31,469
|
|
|
27,916
|
|
|
29,380
|
|
|
28,121
|
|
||||
Effect of assumed conversion of operating partnership units
|
—
|
|
|
4,413
|
|
|
—
|
|
|
—
|
|
||||
Incentive fee shares
|
—
|
|
|
89
|
|
|
—
|
|
|
103
|
|
||||
Weighted average common shares outstanding – diluted
|
31,469
|
|
|
32,418
|
|
|
29,380
|
|
|
28,224
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Income (loss) per share - basic and diluted:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) allocated to common stockholders per share
|
$
|
(0.09
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
Income (loss) per share - diluted:
|
|
|
|
|
|
|
|
||||||||
Net income (loss) allocated to common stockholders per share
|
$
|
(0.09
|
)
|
|
$
|
0.04
|
|
|
$
|
(0.16
|
)
|
|
$
|
—
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss) allocated to common stockholders is not adjusted for:
|
|
|
|
|
|
|
|
||||||||
Income (loss) allocated to unvested restricted shares
|
$
|
75
|
|
|
$
|
13
|
|
|
$
|
125
|
|
|
$
|
22
|
|
Income (loss) allocated to unvested performance stock units
|
86
|
|
|
19
|
|
|
153
|
|
|
54
|
|
||||
Income (loss) attributable to redeemable noncontrolling interests in operating partnership
|
(343
|
)
|
|
—
|
|
|
(598
|
)
|
|
34
|
|
||||
Dividends on preferred stock
|
1,707
|
|
|
978
|
|
|
3,380
|
|
|
1,872
|
|
||||
Total
|
$
|
1,525
|
|
|
$
|
1,010
|
|
|
$
|
3,060
|
|
|
$
|
1,982
|
|
Weighted average diluted shares are not adjusted for:
|
|
|
|
|
|
|
|
||||||||
Effect of unvested restricted shares
|
113
|
|
|
63
|
|
|
82
|
|
|
55
|
|
||||
Effect of unvested performance stock units
|
—
|
|
|
108
|
|
|
—
|
|
|
54
|
|
||||
Effect of assumed conversion of operating partnership units
|
4,290
|
|
|
—
|
|
|
4,256
|
|
|
4,589
|
|
||||
Effect of assumed conversion of preferred stock
|
6,560
|
|
|
3,562
|
|
|
5,555
|
|
|
3,501
|
|
||||
Effect of incentive fee shares
|
124
|
|
|
—
|
|
|
153
|
|
|
—
|
|
||||
Total
|
11,087
|
|
|
3,733
|
|
|
10,046
|
|
|
8,199
|
|
•
|
Level 1: Fair value measurements that are quoted prices (unadjusted) in active markets that we have the ability to access for identical assets or liabilities. Market price data generally is obtained from exchange or dealer markets.
|
•
|
Level 2: Fair value measurements based on inputs other than quoted prices included in Level 1, that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar assets and liabilities in active markets, and inputs other than quoted prices that are observable for the asset or liability, such as interest rates and yield curves that are observable at commonly quoted intervals.
|
•
|
Level 3: Fair value measurements based on valuation techniques that use significant inputs that are unobservable. The circumstances for using these measurements include those in which there is little, if any, market activity for the asset or liability.
|
|
Quoted Market Prices (Level 1)
|
|
Significant Other
Observable Inputs (Level 2)
|
|
Total
|
|
||||||
June 30, 2017
|
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Derivative assets:
|
|
|
|
|
|
|
||||||
Interest rate derivatives - floors
|
$
|
—
|
|
|
$
|
197
|
|
|
$
|
197
|
|
|
Interest rate derivatives - caps
|
—
|
|
|
21
|
|
|
21
|
|
|
|||
Options on futures contracts
|
—
|
|
|
—
|
|
|
—
|
|
|
|||
|
—
|
|
|
218
|
|
|
218
|
|
(1)
|
|||
Non-derivative assets:
|
|
|
|
|
|
|
||||||
Investment in Ashford Inc.
|
9,935
|
|
|
—
|
|
|
9,935
|
|
|
|||
Total
|
$
|
9,935
|
|
|
$
|
218
|
|
|
$
|
10,153
|
|
|
|
Quoted Market Prices (Level 1)
|
|
Significant Other
Observable Inputs (Level 2)
|
|
Total
|
|
||||||
December 31, 2016
|
|
|
|
|
|
|
||||||
Assets
|
|
|
|
|
|
|
||||||
Derivative assets:
|
|
|
|
|
|
|
||||||
Interest rate derivatives - floors
|
$
|
—
|
|
|
$
|
1,091
|
|
|
$
|
1,091
|
|
|
Options on futures contracts
|
58
|
|
|
—
|
|
|
58
|
|
|
|||
|
58
|
|
|
1,091
|
|
|
1,149
|
|
(1)
|
|||
Non-derivative assets:
|
|
|
|
|
|
|
||||||
Investment in Ashford Inc.
|
8,407
|
|
|
—
|
|
|
8,407
|
|
|
|||
Total
|
$
|
8,465
|
|
|
$
|
1,091
|
|
|
$
|
9,556
|
|
|
(1)
|
Reported as “derivative assets” in the condensed consolidated balance sheets.
|
|
|
Gain (Loss) Recognized in Income
|
|
||||||||||||||
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
|
||||||||
Assets
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate derivatives - floors
|
|
$
|
(135
|
)
|
|
$
|
2,687
|
|
|
$
|
(894
|
)
|
|
$
|
6,247
|
|
|
Interest rate derivatives - caps
|
|
(61
|
)
|
|
(13
|
)
|
|
(317
|
)
|
|
(60
|
)
|
|
||||
Options on futures contracts
|
|
(19
|
)
|
|
(77
|
)
|
|
(58
|
)
|
|
(57
|
)
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Non-derivative assets:
|
|
|
|
|
|
|
|
|
|
||||||||
Investment in Ashford Inc.
|
|
(1,563
|
)
|
|
860
|
|
|
1,528
|
|
|
(633
|
)
|
|
||||
Total
|
|
$
|
(1,778
|
)
|
|
$
|
3,457
|
|
|
$
|
259
|
|
|
$
|
5,497
|
|
|
Total combined
|
|
|
|
|
|
|
|
|
|
||||||||
Interest rate derivatives - floors
|
|
$
|
(135
|
)
|
|
$
|
2,687
|
|
|
$
|
(894
|
)
|
|
$
|
6,247
|
|
|
Interest rate derivatives - caps
|
|
(61
|
)
|
|
(13
|
)
|
|
(317
|
)
|
|
(60
|
)
|
|
||||
Options on futures contracts
|
|
96
|
|
|
(77
|
)
|
|
213
|
|
|
(57
|
)
|
|
||||
Unrealized gain (loss) on derivatives
|
|
(100
|
)
|
|
2,597
|
|
|
(998
|
)
|
|
$
|
6,130
|
|
|
|||
Realized gain (loss) on options on futures contracts
|
|
(115
|
)
|
(1)
|
—
|
|
(1)
|
(271
|
)
|
(1)
|
—
|
|
(1)
|
||||
Unrealized gain (loss) on investment in Ashford Inc.
|
|
(1,563
|
)
|
|
860
|
|
|
1,528
|
|
|
(633
|
)
|
|
||||
Net
|
|
$
|
(1,778
|
)
|
|
$
|
3,457
|
|
|
$
|
259
|
|
|
$
|
5,497
|
|
|
(1)
|
Included in “other income (expense)” in the condensed consolidated statements of operations.
|
|
|
June 30, 2017
|
|
December 31, 2016
|
||||||||||||
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
|
Carrying
Value
|
|
Estimated
Fair Value
|
||||||||
Financial assets and liabilities measured at fair value:
|
|
|
|
|
|
|
|
|
||||||||
Investment in Ashford Inc.
|
|
$
|
9,935
|
|
|
$
|
9,935
|
|
|
$
|
8,407
|
|
|
$
|
8,407
|
|
Derivative assets
|
|
218
|
|
|
218
|
|
|
1,149
|
|
|
1,149
|
|
||||
Financial assets not measured at fair value:
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
|
$
|
129,675
|
|
|
$
|
129,675
|
|
|
$
|
126,790
|
|
|
$
|
126,790
|
|
Restricted cash
|
|
34,793
|
|
|
34,793
|
|
|
37,855
|
|
|
37,855
|
|
||||
Accounts receivable, net
|
|
18,607
|
|
|
18,607
|
|
|
18,194
|
|
|
18,194
|
|
||||
Note receivable
|
|
8,098
|
|
|
8,348 to 9,227
|
|
|
8,098
|
|
|
8,511 to 9,407
|
|
||||
Due from Ashford Trust OP, net
|
|
—
|
|
|
—
|
|
|
488
|
|
|
488
|
|
||||
Due from AQUA U.S. Fund
|
|
—
|
|
|
—
|
|
|
2,289
|
|
|
2,289
|
|
||||
Due from related party, net
|
|
321
|
|
|
321
|
|
|
377
|
|
|
377
|
|
||||
Due from third-party hotel managers
|
|
8,227
|
|
|
8,227
|
|
|
7,555
|
|
|
7,555
|
|
||||
Financial liabilities not measured at fair value:
|
|
|
|
|
|
|
|
|
||||||||
Indebtedness
|
|
$
|
915,006
|
|
|
$863,208 to $954,071
|
|
|
$
|
766,964
|
|
|
$ 726,774 to $ 803,276
|
|
||
Accounts payable and accrued expenses
|
|
54,604
|
|
|
54,604
|
|
|
44,791
|
|
|
44,791
|
|
||||
Dividends and distributions payable
|
|
8,356
|
|
|
8,356
|
|
|
5,038
|
|
|
5,038
|
|
||||
Due to Ashford Trust OP, net
|
|
1
|
|
|
1
|
|
|
—
|
|
|
—
|
|
||||
Due to Ashford Inc.
|
|
3,889
|
|
|
3,889
|
|
|
5,085
|
|
|
5,085
|
|
||||
Due to affiliate
|
|
—
|
|
|
—
|
|
|
2,500
|
|
|
2,500
|
|
||||
Due to third-party hotel managers
|
|
2,583
|
|
|
2,583
|
|
|
973
|
|
|
973
|
|
•
|
we made a cash payment to Ashford LLC of
$5.0 million
on June 21, 2017, which is included in “contract modification cost” on our condensed consolidated statements of operations for both the
three and six
months ended
June 30, 2017
, at which time the Fourth Amended and Restated Advisory Agreement became effective;
|
•
|
the termination fee payable to Ashford LLC has been amended by eliminating the
1.1
x multiplier and tax gross up components of the fee;
|
•
|
Ashford Inc. will disclose publicly the revenues and expenses used to calculate “Net Earnings” on a quarterly basis which is used to calculate the termination fee; Ashford LLC will retain an accounting firm to provide a quarterly report to us on the reasonableness of Ashford LLC’s determination of expenses, which will be binding on the parties;
|
•
|
the right of Ashford LLC to appoint a “Designated CEO” has been eliminated;
|
•
|
the right of Ashford LLC to terminate the advisory agreement due to a change in a majority of the “Company Incumbent Board” (as defined in the current advisory agreement) has been eliminated;
|
•
|
we will be incentivized to grow our assets under a “growth covenant” in the Fourth Amended and Restated Advisory Agreement under which we will receive a deemed credit against a base amount of
$45.0 million
for:
3.75%
of the total purchase price of each hotel acquired after the date of the Fourth Amended and Restated Advisory Agreement that was recommended by Ashford LLC, netted against
3.75%
of the total sale price of each hotel sold after the date of the Fourth Amended and Restated Advisory Agreement. The difference between
$45.0 million
and such net credit, if any, is referred to as the “Uninvested Amount.” If the Fourth Amended and Restated Advisory Agreement is terminated, other than due to certain acts by Ashford LLC, we must pay Ashford LLC the Uninvested Amount, in addition to any termination fee payable under the Fourth Amended and Restated Advisory Agreement;
|
•
|
the Fourth Amended and Restated Advisory Agreement requires us to maintain a net worth of not less than
$390 million
plus
75%
of the equity proceeds from the sale of securities by us after December 31, 2016 and a covenant prohibiting us from paying dividends except as required to maintain our REIT status if paying the dividend would reduce our net worth below the required minimum net worth;
|
•
|
the initial term of the Fourth Amended and Restated Advisory Agreement ends on the 10th anniversary of its effective date, subject to renewal by Ashford LLC for up to
seven
additional successive
10
-year terms;
|
•
|
the base management fee payable to Ashford LLC will be fixed at
0.70%
, and the fee will be payable on a monthly basis;
|
•
|
reimbursements of expenses to Ashford LLC will be made monthly in advance, based on an annual expense budget, with a quarterly true-up for actual expenses;
|
•
|
our right to terminate the advisory agreement due to a change of control of Ashford LLC has been eliminated;
|
•
|
our rights to terminate the advisory agreement at the end of each term upon payment of the termination fee based on the parties being unable to agree on new market-based fees or advisor’s performance have been eliminated; however, the Fourth Amended and Restated Advisory Agreement provides a mechanism for the parties to renegotiate the fees payable to Ashford LLC at the end of each term based on then prevailing market conditions, subject to floors and caps on the changes;
|
•
|
if a Change of Control (as defined in the Fourth Amended and Restated Advisory Agreement) is pending, we have agreed to deposit not less than
50%
, and in certain cases
100%
, of the applicable termination fee in escrow, with the payment of any remaining amounts owed to Ashford LLC secured by a letter of credit and/or first priority lien on certain assets;
|
•
|
our ability to terminate the Fourth Amended and Restated Advisory Agreement due to a material default by Ashford LLC is limited to instances where a court finally determines that the default had a material adverse effect on us and Ashford LLC fails to pay monetary damages in accordance with the Fourth Amended and Restated Advisory Agreement; and
|
•
|
if we repudiate the Fourth Amended and Restated Advisory Agreement through actions or omissions that constitute a repudiation as determined by a final non-appealable order from a court of competent jurisdiction, we will be liable to Ashford LLC for a liquidated damages amount.
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Advisory services fee
|
|
|
|
|
|
|
|
|
||||||||
Base advisory fee
|
|
$
|
2,276
|
|
|
$
|
2,206
|
|
|
$
|
4,279
|
|
|
$
|
4,231
|
|
Reimbursable expenses
(1)
|
|
532
|
|
|
645
|
|
|
1,079
|
|
|
1,297
|
|
||||
Equity-based compensation
(2)
|
|
335
|
|
|
2,699
|
|
|
(1,350
|
)
|
|
2,086
|
|
||||
Incentive fee
|
|
—
|
|
|
285
|
|
|
—
|
|
|
285
|
|
||||
Total
|
|
$
|
3,143
|
|
|
$
|
5,835
|
|
|
$
|
4,008
|
|
|
$
|
7,899
|
|
(1)
|
Reimbursable expenses include overhead, internal audit, insurance claims advisory and asset management services.
|
(2)
|
Equity-based compensation is associated with equity grants of Ashford Prime’s common stock, PSUs, LTIP units and Performance LTIP units awarded to officers and employees of Ashford LLC.
|
•
|
our business and investment strategy;
|
•
|
our projected operating results and dividend rates;
|
•
|
our ability to obtain future financing arrangements;
|
•
|
our understanding of our competition;
|
•
|
market trends;
|
•
|
projected capital expenditures;
|
•
|
anticipated acquisitions or dispositions; and
|
•
|
the impact of technology on our operations and business.
|
•
|
factors discussed in our Form 10-K for the year ended
December 31, 2016
, as filed with the Securities and Exchange Commission (the “SEC”) on February 28,
2017
and amended on March 16, 2017 (the “
2016
10-K”), including those set forth under the sections titled “Risk Factors,” “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” “Business,” and “Properties,” as updated in our subsequent Quarterly Reports on Form 10-Q;
|
•
|
general volatility of the capital markets, the general economy or the hospitality industry, whether the result of market events or otherwise;
|
•
|
our ability to deploy capital and raise additional capital at reasonable costs to repay debts, invest in our properties and fund future acquisitions;
|
•
|
unanticipated increases in financing and other costs, including a rise in interest rates;
|
•
|
the degree and nature of our competition;
|
•
|
actual and potential conflicts of interest with Ashford Trust, Ashford LLC, Ashford Inc., Remington Lodging, our executive officers and our non-independent directors;
|
•
|
changes in personnel of Ashford LLC or the lack of availability of qualified personnel;
|
•
|
changes in governmental regulations, accounting rules, tax rates and similar matters;
|
•
|
legislative and regulatory changes, including changes to the Internal Revenue Code and related rules, regulations and interpretations governing the taxation of real estate investment trusts (“REITs”); and
|
•
|
limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes.
|
Revenues
|
|
$
|
13,519
|
|
Expenses
|
|
4,859
|
|
|
Net Earnings
|
|
$
|
8,660
|
|
•
|
Focused Portfolio:
Going forward, the Company's portfolio will be predominantly focused on investing in the luxury chain scale segment. Empirical evidence has shown the luxury segment has had greater RevPAR growth over the long term. The Company will continue to target acquisitions of hotels with a RevPAR of at least 2.0x the national average. As a result, four hotel properties have been designated as non-core to the portfolio, including the Courtyard Philadelphia Downtown Hotel, Courtyard San Francisco Downtown Hotel, Renaissance Tampa Hotel and Marriott Legacy Center Hotel in Plano, Texas. The Company intends to either reposition or opportunistically sell these hotel properties in the
|
•
|
Increased Dividend:
The Company's 2017 dividend policy will be amended commencing with the first quarter by increasing the expected quarterly cash dividend for the Company's common stock by 33%, from $0.12 per diluted share to $0.16 per diluted share. This equates to an annual rate of $0.64 per diluted share, representing a 4.5% yield based on the Company's closing stock price on January 23, 2017;
|
•
|
Reaffirming Conservative Leverage:
The Company will continue to target conservative leverage, with a target leverage level of 45% net debt to gross assets;
|
•
|
Strong Liquidity:
The Company will continue to focus on having access to liquidity for both opportunistic investments and as a hedge against economic uncertainty. The Company will target holding 10-15% of its gross debt balance in cash.
|
•
|
we made a cash payment to Ashford LLC of $5.0 million on June 21, 2017 at which time the Fourth Amended and Restated Advisory Agreement became effective;
|
•
|
the termination fee payable to Ashford LLC has been amended by eliminating the
1.1x
multiplier and tax gross up components of the fee;
|
•
|
Ashford Inc. will disclose publicly the revenues and expenses used to calculate “Net Earnings” on a quarterly basis which is used to calculate the termination fee; Ashford LLC will retain an accounting firm to provide a quarterly report to us on the reasonableness of Ashford LLC’s determination of expenses, which will be binding on the parties;
|
•
|
the right of Ashford LLC to appoint a “Designated CEO” has been eliminated;
|
•
|
the right of Ashford LLC to terminate the advisory agreement due to a change in a majority of the “Company Incumbent Board” (as defined in the current advisory agreement) has been eliminated;
|
•
|
we will be incentivized to grow our assets under a “growth covenant” in the Fourth Amended and Restated Advisory Agreement under which we will receive a deemed credit against a base amount of
$45.0 million
for:
3.75%
of the total purchase price of each hotel acquired after the date of the Fourth Amended and Restated Advisory Agreement that was recommended by Ashford LLC, netted against
3.75%
of the total sale price of each hotel sold after the date of the Fourth Amended and Restated Advisory Agreement. The difference between
$45.0 million
and such net credit, if any, is referred to as the “Uninvested Amount.” If the Fourth Amended and Restated Advisory Agreement is terminated, other than due to certain acts by Ashford LLC, we must pay Ashford LLC the Uninvested Amount, in addition to any termination fee payable under the Fourth Amended and Restated Advisory Agreement;
|
•
|
the Fourth Amended and Restated Advisory Agreement requires us to maintain a net worth of not less than
$390 million
plus
75%
of the equity proceeds from the sale of securities by us after December 31, 2016 and a covenant prohibiting us from paying dividends except as required to maintain our REIT status if paying the dividend would reduce our net worth below the required minimum net worth;
|
•
|
the initial term of the Fourth Amended and Restated Advisory Agreement ends on the 10th anniversary of its effective date, subject to renewal by Ashford LLC for up to
seven
additional successive
10
-year terms;
|
•
|
the base management fee payable to Ashford LLC will be fixed at
0.70%
, and the fee will be payable on a monthly basis;
|
•
|
reimbursements of expenses to Ashford LLC will be made monthly in advance, based on an annual expense budget, with a quarterly true-up for actual expenses;
|
•
|
our right to terminate the advisory agreement due to a change of control of Ashford LLC has been eliminated;
|
•
|
our rights to terminate the advisory agreement at the end of each term upon payment of the termination fee based on the parties being unable to agree on new market-based fees or advisor’s performance have been eliminated; however, the Fourth Amended and Restated Advisory Agreement provides a mechanism for the parties to renegotiate the fees payable to Ashford LLC at the end of each term based on then prevailing market conditions, subject to floors and caps on the changes;
|
•
|
if a Change of Control (as defined in the Fourth Amended and Restated Advisory Agreement) is pending, we have agreed to deposit not less than
50%
, and in certain cases
100%
, of the applicable termination fee in escrow, with the payment of any remaining amounts owed to Ashford LLC secured by a letter of credit and/or first priority lien on certain assets;
|
•
|
our ability to terminate the Fourth Amended and Restated Advisory Agreement due to a material default by Ashford LLC is limited to instances where a court finally determines that the default had a material adverse effect on us and Ashford LLC fails to pay monetary damages in accordance with the Fourth Amended and Restated Advisory Agreement; and
|
•
|
if we repudiate the Fourth Amended and Restated Advisory Agreement through actions or omissions that constitute a repudiation as determined by a final non-appealable order from a court of competent jurisdiction, we will be liable to Ashford LLC for a liquidated damages amount.
|
•
|
Occupancy-Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels’ available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period.
|
•
|
ADR-ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate.
|
•
|
RevPAR-RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period).
|
•
|
advisory fees payable to Ashford LLC;
|
•
|
recurring maintenance necessary to maintain our hotel properties in accordance with brand standards;
|
•
|
interest expense and scheduled principal payments on outstanding indebtedness, including our secured revolving credit facility (see “Contractual Obligations and Commitments”);
|
•
|
distributions, in the form of dividends on our common stock, necessary to qualify for taxation as a REIT;
|
•
|
dividends on preferred stock; and
|
•
|
capital expenditures to improve our hotels.
|
•
|
Consolidated indebtedness (less cash and cash equivalents and amounts represented by marketable securities) to EBITDA not to exceed 6.00x initially, with such ratio being reduced beginning October 1, 2017 to 5.75x and beginning October 1, 2019 to 5.50x. Our ratio was
5.89
x at
June 30, 2017
.
|
•
|
Consolidated recourse indebtedness other than the secured revolving credit facility not to exceed $50,000,000.
|
•
|
Consolidated fixed charge coverage ratio not less than 1.40x initially, with such ratio being increased beginning October 1, 2017 to 1.50x. This ratio was
2.00
x at
June 30, 2017
.
|
•
|
Indebtedness of the consolidated parties that accrues interest at a variable rate (other than the secured revolving credit facility) that is not subject to a “cap,” “collar,” or other similar arrangement not to exceed 25% of consolidated indebtedness.
|
•
|
Consolidated tangible net worth not less than 75% of the consolidated tangible net worth on the closing date of the secured revolving credit facility plus 75% of the net proceeds of any future equity issuances.
|
•
|
Secured debt that is secured by real property (excluding the eight hotels we acquired in connection with the spin-off) not to exceed 70% of the as-is appraised value of such real property.
|
|
Three Months Ended June 30,
|
|
Favorable (Unfavorable)
|
|||||||||||
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Rooms
|
$
|
79,449
|
|
|
$
|
79,583
|
|
|
$
|
(134
|
)
|
|
(0.2
|
)%
|
Food and beverage
|
27,980
|
|
|
27,051
|
|
|
929
|
|
|
3.4
|
|
|||
Other
|
8,626
|
|
|
5,761
|
|
|
2,865
|
|
|
49.7
|
|
|||
Total hotel revenue
|
116,055
|
|
|
112,395
|
|
|
3,660
|
|
|
3.3
|
|
|||
Other
|
37
|
|
|
37
|
|
|
—
|
|
|
—
|
|
|||
Total revenue
|
116,092
|
|
|
112,432
|
|
|
3,660
|
|
|
3.3
|
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Hotel operating expenses:
|
|
|
|
|
|
|
|
|||||||
Rooms
|
17,613
|
|
|
17,096
|
|
|
(517
|
)
|
|
(3.0
|
)
|
|||
Food and beverage
|
19,263
|
|
|
18,267
|
|
|
(996
|
)
|
|
(5.5
|
)
|
|||
Other expenses
|
32,021
|
|
|
30,335
|
|
|
(1,686
|
)
|
|
(5.6
|
)
|
|||
Management fees
|
4,209
|
|
|
4,331
|
|
|
122
|
|
|
2.8
|
|
|||
Total hotel expenses
|
73,106
|
|
|
70,029
|
|
|
(3,077
|
)
|
|
(4.4
|
)
|
|||
Property taxes, insurance and other
|
5,370
|
|
|
4,514
|
|
|
(856
|
)
|
|
(19.0
|
)
|
|||
Depreciation and amortization
|
13,469
|
|
|
11,263
|
|
|
(2,206
|
)
|
|
(19.6
|
)
|
|||
Advisory services fee
|
3,143
|
|
|
5,835
|
|
|
2,692
|
|
|
46.1
|
|
|||
Contract modification cost
|
5,000
|
|
|
—
|
|
|
(5,000
|
)
|
|
|
|
|||
Transaction costs
|
2,066
|
|
|
438
|
|
|
(1,628
|
)
|
|
(371.7
|
)
|
|||
Corporate general and administrative
|
1,531
|
|
|
9,838
|
|
|
8,307
|
|
|
84.4
|
|
|||
Total expenses
|
103,685
|
|
|
101,917
|
|
|
(1,768
|
)
|
|
(1.7
|
)
|
|||
Operating income (loss)
|
12,407
|
|
|
10,515
|
|
|
1,892
|
|
|
18.0
|
|
|||
Equity in earnings (loss) of unconsolidated entity
|
—
|
|
|
63
|
|
|
(63
|
)
|
|
(100.0
|
)
|
|||
Interest income
|
165
|
|
|
50
|
|
|
115
|
|
|
230.0
|
|
|||
Other income (expense)
|
(113
|
)
|
|
—
|
|
|
(113
|
)
|
|
|
|
|||
Interest expense and amortization of loan costs
|
(9,931
|
)
|
|
(10,637
|
)
|
|
706
|
|
|
6.6
|
|
|||
Unrealized gain (loss) on investment in Ashford Inc.
|
(1,563
|
)
|
|
860
|
|
|
(2,423
|
)
|
|
(281.7
|
)
|
|||
Unrealized gain (loss) on derivatives
|
(100
|
)
|
|
2,597
|
|
|
(2,697
|
)
|
|
(103.9
|
)
|
|||
Income (loss) before income taxes
|
865
|
|
|
3,448
|
|
|
(2,583
|
)
|
|
(74.9
|
)
|
|||
Income tax (expense) benefit
|
(479
|
)
|
|
(1,156
|
)
|
|
677
|
|
|
58.6
|
|
|||
Net income (loss)
|
386
|
|
|
2,292
|
|
|
(1,906
|
)
|
|
(83.2
|
)
|
|||
(Income) loss from consolidated entities attributable to noncontrolling interest
|
(1,614
|
)
|
|
80
|
|
|
(1,694
|
)
|
|
(2,117.5
|
)
|
|||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership
|
343
|
|
|
(184
|
)
|
|
527
|
|
|
286.4
|
|
|||
Net income (loss) attributable to the Company
|
$
|
(885
|
)
|
|
$
|
2,188
|
|
|
$
|
(3,073
|
)
|
|
(140.4
|
)%
|
Hotel Properties
|
|
Location
|
|
Acquisition/Disposition
|
|
Acquisition/Disposition Date
|
Seattle Courtyard Downtown
|
|
Seattle, WA
|
|
Disposition
|
|
July 1, 2016
|
Park Hyatt Beaver Creek
(1)
|
|
Beaver Creek, CO
|
|
Acquisition
|
|
March 31, 2017
|
Hotel Yountville
(1)
|
|
Yountville, CA
|
|
Acquisition
|
|
May 11, 2017
|
(1)
|
The operating results of these hotel properties have been included in our results of operations as of their acquisition dates.
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Occupancy
|
84.07
|
%
|
|
86.47
|
%
|
||
ADR (average daily rate)
|
$
|
263.65
|
|
|
$
|
255.90
|
|
RevPAR (revenue per available room)
|
$
|
221.65
|
|
|
$
|
221.29
|
|
Rooms revenue (in thousands)
|
$
|
79,449
|
|
|
$
|
79,583
|
|
Total hotel revenue (in thousands)
|
$
|
116,055
|
|
|
$
|
112,395
|
|
|
Three Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Occupancy
|
86.21
|
%
|
|
86.27
|
%
|
||
ADR (average daily rate)
|
$
|
260.67
|
|
|
$
|
259.26
|
|
RevPAR (revenue per available room)
|
$
|
224.73
|
|
|
$
|
223.67
|
|
Rooms revenue (in thousands)
|
$
|
75,751
|
|
|
$
|
75,349
|
|
Total hotel revenue (in thousands)
|
$
|
108,753
|
|
|
$
|
107,587
|
|
|
Six Months Ended June 30,
|
|
Favorable (Unfavorable)
|
|||||||||||
|
2017
|
|
2016
|
|
$ Change
|
|
% Change
|
|||||||
Revenue
|
|
|
|
|
|
|
|
|||||||
Rooms
|
$
|
146,867
|
|
|
$
|
148,834
|
|
|
$
|
(1,967
|
)
|
|
(1.3
|
)%
|
Food and beverage
|
52,453
|
|
|
51,916
|
|
|
537
|
|
|
1.0
|
|
|||
Other
|
13,991
|
|
|
11,409
|
|
|
2,582
|
|
|
22.6
|
|
|||
Total hotel revenue
|
213,311
|
|
|
212,159
|
|
|
1,152
|
|
|
0.5
|
|
|||
Other
|
77
|
|
|
70
|
|
|
7
|
|
|
10.0
|
|
|||
Total revenue
|
213,388
|
|
|
212,229
|
|
|
1,159
|
|
|
0.5
|
|
|||
Expenses
|
|
|
|
|
|
|
|
|||||||
Hotel operating expenses:
|
|
|
|
|
|
|
|
|||||||
Rooms
|
33,410
|
|
|
32,915
|
|
|
(495
|
)
|
|
(1.5
|
)
|
|||
Food and beverage
|
36,124
|
|
|
35,712
|
|
|
(412
|
)
|
|
(1.2
|
)
|
|||
Other expenses
|
59,752
|
|
|
58,674
|
|
|
(1,078
|
)
|
|
(1.8
|
)
|
|||
Management fees
|
7,754
|
|
|
8,138
|
|
|
384
|
|
|
4.7
|
|
|||
Total hotel expenses
|
137,040
|
|
|
135,439
|
|
|
(1,601
|
)
|
|
(1.2
|
)
|
|||
Property taxes, insurance and other
|
10,444
|
|
|
9,557
|
|
|
(887
|
)
|
|
(9.3
|
)
|
|||
Depreciation and amortization
|
25,440
|
|
|
23,167
|
|
|
(2,273
|
)
|
|
(9.8
|
)
|
|||
Advisory services fee
|
4,008
|
|
|
7,899
|
|
|
3,891
|
|
|
49.3
|
|
|||
Contract modification cost
|
5,000
|
|
|
—
|
|
|
(5,000
|
)
|
|
|
|
|||
Transaction costs
|
6,394
|
|
|
438
|
|
|
(5,956
|
)
|
|
(1,359.8
|
)
|
|||
Corporate general and administrative
|
5,405
|
|
|
13,761
|
|
|
8,356
|
|
|
60.7
|
|
|||
Total expenses
|
193,731
|
|
|
190,261
|
|
|
(3,470
|
)
|
|
(1.8
|
)
|
|||
Operating income (loss)
|
19,657
|
|
|
21,968
|
|
|
(2,311
|
)
|
|
(10.5
|
)
|
|||
Equity in earnings (loss) of unconsolidated entity
|
—
|
|
|
(2,587
|
)
|
|
2,587
|
|
|
100.0
|
|
|||
Interest income
|
277
|
|
|
82
|
|
|
195
|
|
|
237.8
|
|
|||
Other income (expense)
|
(270
|
)
|
|
(10
|
)
|
|
(260
|
)
|
|
(2,600.0
|
)
|
|||
Interest expense and amortization of loan costs
|
(18,133
|
)
|
|
(21,271
|
)
|
|
3,138
|
|
|
14.8
|
|
|||
Write-off of loan costs and exit fees
|
(1,963
|
)
|
|
—
|
|
|
(1,963
|
)
|
|
|
|
|||
Unrealized gain (loss) on investment in Ashford Inc.
|
1,528
|
|
|
(633
|
)
|
|
2,161
|
|
|
341.4
|
|
|||
Unrealized gain (loss) on derivatives
|
(998
|
)
|
|
6,130
|
|
|
(7,128
|
)
|
|
(116.3
|
)
|
|||
Income (loss) before income taxes
|
98
|
|
|
3,679
|
|
|
(3,581
|
)
|
|
(97.3
|
)
|
|||
Income tax (expense) benefit
|
(1
|
)
|
|
(1,526
|
)
|
|
1,525
|
|
|
99.9
|
|
|||
Net income (loss)
|
97
|
|
|
2,153
|
|
|
(2,056
|
)
|
|
(95.5
|
)
|
|||
(Income) loss from consolidated entities attributable to noncontrolling interests
|
(1,593
|
)
|
|
(65
|
)
|
|
(1,528
|
)
|
|
(2,350.8
|
)
|
|||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership
|
598
|
|
|
(34
|
)
|
|
632
|
|
|
1,858.8
|
|
|||
Net income (loss) attributable to the Company
|
$
|
(898
|
)
|
|
$
|
2,054
|
|
|
$
|
(2,952
|
)
|
|
(143.7
|
)%
|
Hotel Properties
|
|
Location
|
|
Acquisition/Disposition
|
|
Acquisition/Disposition Date
|
Seattle Courtyard Downtown
|
|
Seattle, WA
|
|
Disposition
|
|
July 1, 2016
|
Park Hyatt Beaver Creek
(1)
|
|
Beaver Creek, CO
|
|
Acquisition
|
|
March 31, 2017
|
Hotel Yountville
(1)
|
|
Yountville, CA
|
|
Acquisition
|
|
May 11, 2017
|
(1)
|
The operating results of these hotel properties have been included in our results of operations as of their acquisition dates.
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Occupancy
|
81.35
|
%
|
|
82.12
|
%
|
||
ADR (average daily rate)
|
$
|
261.03
|
|
|
$
|
251.98
|
|
RevPAR (revenue per available room)
|
$
|
212.35
|
|
|
$
|
206.93
|
|
Rooms revenue (in thousands)
|
$
|
146,867
|
|
|
$
|
148,834
|
|
Total hotel revenue (in thousands)
|
$
|
213,311
|
|
|
$
|
212,159
|
|
|
Six Months Ended June 30,
|
||||||
|
2017
|
|
2016
|
||||
Occupancy
|
82.34
|
%
|
|
82.01
|
%
|
||
ADR (average daily rate)
|
$
|
259.41
|
|
|
$
|
256.74
|
|
RevPAR (revenue per available room)
|
$
|
213.60
|
|
|
$
|
210.56
|
|
Rooms revenue (in thousands)
|
$
|
143,169
|
|
|
$
|
141,865
|
|
Total hotel revenue (in thousands)
|
$
|
206,010
|
|
|
$
|
204,165
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
|
$
|
386
|
|
|
$
|
2,292
|
|
|
$
|
97
|
|
|
$
|
2,153
|
|
(Income) loss from consolidated entities attributable to noncontrolling interest
|
|
(1,614
|
)
|
|
80
|
|
|
(1,593
|
)
|
|
(65
|
)
|
||||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership
|
|
343
|
|
|
(184
|
)
|
|
598
|
|
|
(34
|
)
|
||||
Net income (loss) attributable to the Company
|
|
(885
|
)
|
|
2,188
|
|
|
(898
|
)
|
|
2,054
|
|
||||
Interest income
(1)
|
|
(163
|
)
|
|
(50
|
)
|
|
(275
|
)
|
|
(82
|
)
|
||||
Interest expense and amortization of loan costs
(1)
|
|
9,463
|
|
|
10,230
|
|
|
17,227
|
|
|
20,459
|
|
||||
Depreciation and amortization
(1)
|
|
12,752
|
|
|
10,557
|
|
|
24,003
|
|
|
21,757
|
|
||||
Income tax expense (benefit)
(1)
|
|
394
|
|
|
1,156
|
|
|
(107
|
)
|
|
1,526
|
|
||||
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership
|
|
(343
|
)
|
|
184
|
|
|
(598
|
)
|
|
34
|
|
||||
EBITDA available to the Company and OP unitholders
|
|
21,218
|
|
|
24,265
|
|
|
39,352
|
|
|
45,748
|
|
||||
Amortization of favorable (unfavorable) contract assets (liabilities)
|
|
44
|
|
|
(23
|
)
|
|
93
|
|
|
(62
|
)
|
||||
Transaction and management conversion costs
|
|
2,112
|
|
|
438
|
|
|
6,440
|
|
|
438
|
|
||||
Other (income) expense
|
|
113
|
|
|
—
|
|
|
270
|
|
|
10
|
|
||||
Write-off of loan costs and exit fees
|
|
—
|
|
|
—
|
|
|
1,963
|
|
|
—
|
|
||||
Unrealized (gain) loss on investments
|
|
1,563
|
|
|
(860
|
)
|
|
(1,528
|
)
|
|
633
|
|
||||
Unrealized (gain) loss on derivatives
|
|
100
|
|
|
(2,597
|
)
|
|
998
|
|
|
(6,130
|
)
|
||||
Non-cash stock/unit-based compensation
|
|
597
|
|
|
2,920
|
|
|
(1,071
|
)
|
|
2,307
|
|
||||
Legal, advisory and settlement costs
|
|
3
|
|
|
8,913
|
|
|
2,948
|
|
|
12,226
|
|
||||
Contract modification cost
|
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
||||
Software implementation costs
|
|
79
|
|
|
—
|
|
|
79
|
|
|
—
|
|
||||
Company’s portion of unrealized (gain) loss of investment in securities investment fund
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
2,587
|
|
||||
Adjusted EBITDA available to the Company and OP unitholders
|
|
$
|
30,829
|
|
|
$
|
32,993
|
|
|
$
|
54,544
|
|
|
$
|
57,757
|
|
(1)
|
Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for non-controlling interest for each line item:
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Interest expense and amortization of loan costs
|
|
$
|
(468
|
)
|
|
$
|
(407
|
)
|
|
$
|
(906
|
)
|
|
$
|
(812
|
)
|
Depreciation and amortization
|
|
(717
|
)
|
|
(706
|
)
|
|
(1,437
|
)
|
|
(1,410
|
)
|
||||
Interest income
|
|
2
|
|
|
—
|
|
|
2
|
|
|
—
|
|
||||
Income tax expense (benefit)
|
|
(85
|
)
|
|
—
|
|
|
(108
|
)
|
|
—
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Net income (loss)
|
|
$
|
386
|
|
|
$
|
2,292
|
|
|
$
|
97
|
|
|
$
|
2,153
|
|
(Income) loss from consolidated entities attributable to noncontrolling interest
|
|
(1,614
|
)
|
|
80
|
|
|
(1,593
|
)
|
|
(65
|
)
|
||||
Net (income) loss attributable to redeemable noncontrolling interests in operating partnership
|
|
343
|
|
|
(184
|
)
|
|
598
|
|
|
(34
|
)
|
||||
Preferred dividends
|
|
(1,707
|
)
|
|
(978
|
)
|
|
(3,380
|
)
|
|
(1,872
|
)
|
||||
Net income (loss) attributable to common stockholders
|
|
(2,592
|
)
|
|
1,210
|
|
|
(4,278
|
)
|
|
182
|
|
||||
Depreciation and amortization on real estate
(1)
|
|
12,752
|
|
|
10,557
|
|
|
24,003
|
|
|
21,757
|
|
||||
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership
|
|
(343
|
)
|
|
184
|
|
|
(598
|
)
|
|
34
|
|
||||
FFO available to common stockholders and OP unitholders
|
|
9,817
|
|
|
11,951
|
|
|
19,127
|
|
|
21,973
|
|
||||
Preferred dividends
|
|
1,707
|
|
|
978
|
|
|
3,380
|
|
|
1,872
|
|
||||
Transaction and management conversion costs
|
|
2,112
|
|
|
438
|
|
|
6,440
|
|
|
438
|
|
||||
Other (income) expense
|
|
113
|
|
|
—
|
|
|
270
|
|
|
10
|
|
||||
Write-off of loan costs and exit fees
|
|
—
|
|
|
—
|
|
|
1,963
|
|
|
—
|
|
||||
Unrealized (gain) loss on investments
|
|
1,563
|
|
|
(860
|
)
|
|
(1,528
|
)
|
|
633
|
|
||||
Unrealized (gain) loss on derivatives
|
|
100
|
|
|
(2,597
|
)
|
|
998
|
|
|
(6,130
|
)
|
||||
Non-cash stock/unit-based compensation
|
|
597
|
|
|
2,920
|
|
|
(1,071
|
)
|
|
2,307
|
|
||||
Legal, advisory and settlement costs
|
|
3
|
|
|
8,913
|
|
|
2,948
|
|
|
12,226
|
|
||||
Contract modification cost
|
|
5,000
|
|
|
—
|
|
|
5,000
|
|
|
—
|
|
||||
Software implementation costs
|
|
79
|
|
|
—
|
|
|
79
|
|
|
—
|
|
||||
Company’s portion of unrealized (gain) loss of investment in securities investment fund
|
|
—
|
|
|
(63
|
)
|
|
—
|
|
|
2,587
|
|
||||
Adjusted FFO available to the Company and OP unitholders
|
|
$
|
21,091
|
|
|
$
|
21,680
|
|
|
$
|
37,606
|
|
|
$
|
35,916
|
|
(1)
|
Net of adjustment for noncontrolling interest in consolidated entities. The following table presents the amounts of the adjustments for non-controlling interest for each line item:
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
|
2017
|
|
2016
|
|
2017
|
|
2016
|
||||||||
Depreciation and amortization on real estate
|
|
$
|
(717
|
)
|
|
$
|
(706
|
)
|
|
$
|
(1,437
|
)
|
|
$
|
(1,410
|
)
|
Hotel Property
|
|
Location
|
|
Service Type
|
|
Total Rooms
|
|
% Owned
|
|
Owned Rooms
|
|||
Fee Simple Properties
|
|
|
|
|
|
|
|
|
|
|
|||
Hilton
|
|
Washington, D.C.
|
|
Full
|
|
550
|
|
|
75
|
%
|
|
413
|
|
Marriott
|
|
Seattle, WA
|
|
Full
|
|
358
|
|
|
100
|
|
|
358
|
|
Marriott
|
|
Plano, TX
|
|
Full
|
|
404
|
|
|
100
|
|
|
404
|
|
Courtyard by Marriott
|
|
Philadelphia, PA
|
|
Select
|
|
499
|
|
|
100
|
|
|
499
|
|
Courtyard by Marriott
|
|
San Francisco, CA
|
|
Select
|
|
408
|
|
|
100
|
|
|
408
|
|
Chicago Sofitel Magnificent Mile
|
|
Chicago, IL
|
|
Full
|
|
415
|
|
|
100
|
|
|
415
|
|
Pier House Resort
|
|
Key West, FL
|
|
Full
|
|
142
|
|
|
100
|
|
|
142
|
|
Ritz Carlton, St. Thomas
|
|
St. Thomas, USVI
|
|
Full
|
|
180
|
|
|
100
|
|
|
180
|
|
Park Hyatt Beaver Creek
|
|
Beaver Creek, CO
|
|
Full
|
|
190
|
|
|
100
|
|
|
190
|
|
Hotel Yountville
|
|
Yountville, CA
|
|
Full
|
|
80
|
|
|
100
|
|
|
80
|
|
Ground Lease Properties
|
|
|
|
|
|
|
|
|
|
|
|||
Hilton
(1)
|
|
La Jolla, CA
|
|
Full
|
|
394
|
|
|
75
|
%
|
|
296
|
|
Renaissance
(2)
|
|
Tampa, FL
|
|
Full
|
|
293
|
|
|
100
|
|
|
293
|
|
Bardessono Hotel
(3)
|
|
Yountville, CA
|
|
Full
|
|
62
|
|
|
100
|
|
|
62
|
|
Total
|
|
|
|
|
|
3,975
|
|
|
|
|
3,740
|
|
(1)
|
The ground lease expires in 2067.
|
(2)
|
The ground lease expires in 2080.
|
(3)
|
The initial ground lease expires in 2055. The ground lease contains two 25-year extension options, at our election.
|
ITEM 3.
|
QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
|
ITEM 4.
|
CONTROLS AND PROCEDURES
|
ITEM 1.
|
LEGAL PROCEEDINGS
|
ITEM 1A.
|
RISK FACTORS
|
ITEM 2.
|
UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
|
Period
|
|
Total Number of Shares Purchased
|
|
Average Price Paid Per Share
|
|
Total Number of Shares Purchased as Part of a Publicly Announced Plan
|
|
Maximum Dollar Value of Shares That May Yet Be Purchased Under the Plan
|
||||||
Common stock:
|
|
|
|
|
|
|
|
|
||||||
April 1 to April 30
|
|
7,331
|
|
(1) (3)
|
$
|
10.81
|
|
(2)
|
—
|
|
|
$
|
36,787,500
|
|
May 1 to May 31
|
|
154
|
|
(1)
|
$
|
10.88
|
|
(2)
|
—
|
|
|
$
|
36,787,500
|
|
June 1 to June 30
|
|
1,629
|
|
(1)
|
$
|
10.65
|
|
(2)
|
—
|
|
|
$
|
36,787,500
|
|
Total
|
|
9,114
|
|
|
$
|
10.81
|
|
|
—
|
|
|
|
(1)
|
Includes 28, 6 and 38 shares in April, May and June, respectively, that were repurchased from Ashford Trust when former Ashford Trust employees who held restricted shares of Ashford Prime common stock they received in the spin-off, forfeited the shares to Ashford Trust upon termination of employment.
|
(2)
|
There is no cost associated with the forfeiture of restricted shares of 341, 148 and 1,591 of our common stock in April, May and June, respectively.
|
(3)
|
Includes 6,962 shares in April that were purchased from employees of Ashford LLC to satisfy stock vesting tax withholdings.
|
ITEM 3.
|
DEFAULT UPON SENIOR SECURITIES
|
ITEM 4.
|
MINE SAFETY DISCLOSURES
|
ITEM 5.
|
OTHER INFORMATION
|
ITEM 6.
|
EXHIBITS
|
Exhibit
|
|
Description
|
|
3.1
|
|
||
3.2
|
|
||
3.3
|
|
||
3.4
|
|
||
3.5
|
|
||
3.6
|
|
||
3.7
|
|
||
3.8
|
|
||
3.9
|
|
||
10.1
|
|
||
10.2
|
|
||
12*
|
|
||
31.1*
|
|
||
31.2*
|
|
||
32.1*
|
|
||
32.2*
|
|
Date:
|
August 8, 2017
|
By:
|
/s/
RICHARD J. STOCKTON
|
|
|
|
|
Richard J. Stockton
|
|
|
|
|
President and Chief Executive Officer
|
|
|
|
|
|
|
Date:
|
August 8, 2017
|
By:
|
/s/
DERIC S. EUBANKS
|
|
|
|
|
Deric S. Eubanks
|
|
|
|
|
Chief Financial Officer
|
|
|
Six Months Ended
|
|
Year Ended December 31,
|
||||||||||||||||||||
|
June 30, 2017
|
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||||
Earnings
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Income (loss) from continuing operations before provision for income taxes and noncontrolling interests
|
$
|
98
|
|
|
$
|
25,894
|
|
|
$
|
(4,428
|
)
|
|
$
|
4,635
|
|
|
$
|
(15,585
|
)
|
|
$
|
591
|
|
Amount recorded for equity in (earnings) loss of unconsolidated entity
|
—
|
|
|
2,587
|
|
|
2,927
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Add:
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on indebtedness
|
15,735
|
|
|
37,712
|
|
|
35,254
|
|
|
37,203
|
|
|
32,266
|
|
|
29,991
|
|
||||||
Amortization of loan costs
|
2,398
|
|
|
3,169
|
|
|
2,575
|
|
|
1,828
|
|
|
745
|
|
|
1,253
|
|
||||||
Interest component of operating leases
|
223
|
|
|
431
|
|
|
353
|
|
|
264
|
|
|
227
|
|
|
220
|
|
||||||
|
$
|
18,454
|
|
|
$
|
69,793
|
|
|
$
|
36,681
|
|
|
$
|
43,930
|
|
|
$
|
17,653
|
|
|
$
|
32,055
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Fixed charges
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Interest on indebtedness
|
$
|
15,735
|
|
|
$
|
37,712
|
|
|
$
|
35,254
|
|
|
$
|
37,203
|
|
|
$
|
32,266
|
|
|
$
|
29,991
|
|
Amortization of loan costs
|
2,398
|
|
|
3,169
|
|
|
2,575
|
|
|
1,828
|
|
|
745
|
|
|
1,253
|
|
||||||
Interest component of operating leases
|
223
|
|
|
431
|
|
|
353
|
|
|
264
|
|
|
227
|
|
|
220
|
|
||||||
|
$
|
18,356
|
|
|
$
|
41,312
|
|
|
$
|
38,182
|
|
|
$
|
39,295
|
|
|
$
|
33,238
|
|
|
$
|
31,464
|
|
Preferred stock dividends
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Series A Preferred Stock
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,867
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Series B Preferred Stock
|
3,380
|
|
|
3,860
|
|
|
119
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
|
$
|
3,380
|
|
|
$
|
3,860
|
|
|
$
|
1,986
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Combined fixed charges and preferred stock dividends
|
$
|
21,736
|
|
|
$
|
45,172
|
|
|
$
|
40,168
|
|
|
$
|
39,295
|
|
|
$
|
33,238
|
|
|
$
|
31,464
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to fixed charges
|
1.01
|
|
|
1.69
|
|
|
|
|
1.12
|
|
|
|
|
1.02
|
|
||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Ratio of earnings to combined fixed charges and preferred stock dividends
|
|
|
1.55
|
|
|
|
|
1.12
|
|
|
|
|
1.02
|
|
|||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deficit (Fixed charges)
|
|
|
|
|
|
|
$
|
1,501
|
|
|
|
|
|
$
|
15,585
|
|
|
|
|
||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Deficit (Combined fixed charges and preferred stock dividends)
|
$
|
3,282
|
|
|
|
|
|
$
|
3,487
|
|
|
|
|
|
$
|
15,585
|
|
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Ashford Hospitality Prime, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ RICHARD J. STOCKTON
|
|
Richard J. Stockton
|
|
President and Chief Executive Officer
|
|
1.
|
I have reviewed this Quarterly Report on Form 10-Q of Ashford Hospitality Prime, Inc.;
|
2.
|
Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;
|
3.
|
Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;
|
4.
|
The registrant’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:
|
(a)
|
designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
(b)
|
designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
(c)
|
evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
(d)
|
disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and
|
5.
|
The registrant’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s board of directors (or persons performing the equivalent functions):
|
(a)
|
all significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and
|
(b)
|
any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.
|
/s/ DERIC S. EUBANKS
|
|
Deric S. Eubanks
|
|
Chief Financial Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/
RICHARD J. STOCKTON
|
|
Richard J. Stockton
|
|
President and Chief Executive Officer
|
|
(1)
|
The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended; and
|
(2)
|
The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.
|
/s/
DERIC S. EUBANKS
|
|
Deric S. Eubanks
|
|
Chief Financial Officer
|
|