Q4 2020 Ashford Hospitality Trust Inc Earnings Call
Greetings and welcome to the Ashford Hospitality Trust fourth quarter, 2000, and 'twenty results Conference call. At this time all participants are in listen only mode. A question and answer session will follow the formal presentation.
If anyone should require operator assistance during the conference. Please press star zero on your telephone keypad as a reminder of this conference is being recorded.
I would now like to turn the conference over to your host Jordan Jennings Investor Relations for Ashford Hospitality Trust. Please go ahead Mitch Jennings.
Good day, everyone and welcome to today's conference call to review the results for Ashford Hospitality Trust for the fourth quarter and full year 2020 and to update you on recent developments on the call today will be Rob Hayes, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, and Jeremy Welter Chief.
And after the results as well as notice of the test.
Building on this conference call on a listen only basis over the Internet were distributed yesterday afternoon and of pretzels.
At this time I remind you of that certain statements and assumptions and this conference call contain or are based upon forward looking information and are being made pursuant to the safe Harbor provision at the federal security regulations.
Such forward looking statements are subject to numerous assumptions, uncertainties and known or unknown risks, which could cause actual results to differ materially from those anticipated.
These factors of more fully discussed and the company and filings with the Securities and Exchange Commission before and looking statements included in this conference call are only made as of the date of this call and and company is not obligated to publicly update or revise them and in addition, certain terms used on this call are non-GAAP financial measures reconciliations of at.
Which are provided and the company's earnings release, and accompanying tables or schedules, which have been filed on form 8-K with the SEC on February 24th 2021, and May also be access at the company's website at Www Dot H T REIT dotcom.
Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release also unless otherwise stated all of our reported results discussed on this call compare the fourth quarter of 2020 for the fourth quarter of 2019, I will now turn the call over to Rob Hayes. Please go ahead Sir.
Sure.
Morning, and welcome to our call.
Since our last call of October our business and the industry of remained pressured due to the pandemic and these remain challenging times for our country the economy and of course, the hospitality industry.
Start with the current environment and how Ashford Trust has managed through this pandemic and the early parts of the recovery.
After that Derek will review, our financial results and Jeremy will provide an operational update on our portfolio.
I'd like to highlight of some of our accomplishments and we can get into the details later on the call.
First we secured strategic financing with additional future commitments to provide years of runway.
Second we effectively completed our forbearance initiative.
Third we of Delever, the balance sheet by close to half of $1 billion since the beginning of the pandemic.
Fourth we have materially grown both the equity value of the company and daily trading volume to provide increased liquidity for our shareholders.
We have reduced our monthly property cash utilization by approximately 85% since the second quarter.
And lastly.
So we have and attractive loan maturity schedule and we have successfully modified property loan extension tests on two large pools for 'twenty three and 2000 for tests. This initiative will continue to be of focus for us going forward.
Now, while we have made progress getting our business back up and running we.
We anticipate dealing with challenges for some time because of its because of the impact of COVID-19 on the use of hospitality industry and the day to day operations at our hotels.
But there have been as I mentioned, a number of positive developments for both of our company and the hospitality industry over the past few months.
And are encouraged by the development and the deployment of vaccines and the U S and believe that progress on that front, we'll provide some visibility to end.
And of the pandemic some.
And some doctors and scientists believe that hurt and Muni and the U S could be reached as early as April.
As I mentioned earlier, we are substantially complete with our debt forbearance efforts signing several agreements during and subsequent to the end of the quarter.
And most importantly last month, we closed a crucial strategic financing, we drew down and initial $200 million at the closing of the financing and have the option to draw down an additional $250 million if needed.
We are optimistic about the long term outlook for the company and by taking decisive actions to strength our balance sheet with this financing and other steps. We now have multiple years of runway that will allow us to capitalize on the upcoming recovery and the hospitality industry.
As discussed on our recent earnings calls our response of this pandemic has been Swift and comprehensive.
We have focused our efforts on providing a safe environment for our guests and staff at our properties. While at the same time, taking aggressive measures to protect our properties and preserve liquidity. So that we can be and are positioned to return to profitability as the economy opens and travel resumes.
Operationally, we are focused on mitigating the financial impacts of the pandemic with aggressive cost control initiatives, including working closely with our property managers to minimize cost structures and maximize liquidity at the hotels and this is where our relationship with our affiliated property manager Remington and really sets us apart from.
And that's been able to quickly cut costs and rapidly adjust for this new operating environment. We're proud of their efforts and believe this important relationship has enabled us to better weather the impact of COVID-19, and Jeremy will discuss this more in detail.
We also significantly reduced our planned spend for capex for the year and suspended both of our common and preferred dividends and Derek will provide more detail around our liquidity outlook.
We've been actively working with our lenders on property level debt to arrange mutually acceptable forbearance arrangements to reduce our near term cash utilization and improve our liquidity and.
In early October we announced we had entered into forbearance agreements on our keys loan pools as well as the Hilton Boston back Bay.
Which in total represents 35 hotels and approximately $1 $3 billion of debt. We also extended our loan on the Marriott Gateway, which now has a final maturity date of November of 2021, we anticipate refinancing of slow later this year as terms debt terms continue to improve and they recovery advances.
On December 31st we execute forbearance arrangements on two loan pools, representing five hotels as well as the loans for the residents and Jacksonville and residence and Manchester together of these agreements represented $52 million of debt.
Subsequent to quarter end on January 19th we entered into a modification agreement on our JP Morgan eight portfolio loan representing eight hotels and $395 million of debt disagreement paid all deferred amounts are core.
<unk> and exchange for reducing future debt yield extension tests and Additionally on February 9th we entered into a modification agreement on our <unk> portfolio loans, representing 17 hotels and $419 million of debt. This agreement also pay deferred amounts current and exchange for lowering future debt yield extension tests.
With the signing of these agreements we are now substantially complete with our forbearance initiatives and as we have loan for <unk> as we have loan forbearance for modification agreements at place for 97 properties, representing approximately 98% of our current outstanding mortgage debt balance. These forbearance agreements are important because they typically allow us to defer interest on our loans for a period of time.
And subject to certain conditions and also allow us to utilize lender and manage held reserve accounts, which are included in restricted cash our balance sheet to fund operating shortfalls at hotels, and we continue to have discussions with our lenders on the small remaining locals.
We have not yet signed forbearance agreements as.
As I mentioned on prior call one of my challenges of CEO is to make sure that we emerge from this crisis and are better positioned as a company to that end with the closing of our strategic financing and given the progress. We've made on these forbearance as we're now in a position of spend time analyzing lessons that we've learned from this crisis and over the past decade.
Of those reflections will likely lead to an update of the go forward strategy of Ashford Trust.
This could include changes to our leverage profile financing strategies and investment criteria, we will be communique and these updates for the investment community in due course.
The past year has been extraordinary by any measure and I cannot be prouder of the effort and the performance of our teams. During this time I believe our response has been the right one for both the short and long term health of our guests our portfolio. The communities, we serve and our shareholders. Our management team has extensive experience and effectively navigating tough market environments and extended downturns now each crisis is invariably dip.
But we believe we of the right plan in place to protect long term values of our assets and the company I will now turn the call over to Derek to review, our fourth core financial performance.
Thanks, Rob for the fourth quarter of 2020, we reported a net loss attributable to common stockholders of $75 million or $2 29 per diluted share for the quarter, we reported <unk> per diluted share of negative $1 67.
Adjusted EBITDA of <unk> totaled negative $23 1 million for the quarter.
At the end of the fourth quarter, we had $3 7 billion of mortgage loans with a blended average interest rate of three 5%.
This average interest rate does not take into account any default rates, our loans were approximately 6% fixed rate and 94% floating rate. Our hotel loans are all non recourse as Rob mentioned, we have signed forbearance or other agreements for 97 properties, representing approximately 98% of our current outstanding mortgage debt.
Yes.
We ended the quarter with cash and cash equivalents of $92 9 million and restricted cash of $74 $4 million.
Vast majority of that restricted cash is comprised of lender and manager held reserve accounts.
And at the end of the quarter, we also had $9 $4 million and due from third party hotel managers. This primarily represents cash held by one of our property managers, which is also available to fund hotel operating costs.
From a cash utilization standpoint, our hotel EBITDA and the fourth quarter was negative $9 $3 million.
And that equates to a shortfall of around $3 million to $4 million per month.
Our current monthly run rate for interest expense is approximately $11 $4 million and our current monthly run rate for corporate G&A and advisory expense is approximately $4 million and.
And total our current monthly cash utilization is approximately $18 million to $20 million, which is down significantly from around $37 million that we.
Close and the second quarter.
As of December 31, 2020, our portfolio consisted of 103 hotels with 22000 and 590 for net rooms, and our current share count stands at approximately $86 4 million fully diluted shares outstanding which is comprised of $84 2 million shares of common stock.
And $2 2 million op units at yesterday's closing stock price of $3 97 and.
That equates to an equity market cap of approximately $343 million.
During the quarter, we closed on our previously commenced offers to exchange shares of our common stock for all outstanding shares of each series of preferred stock approximately 30% of the preferred stock participated and the exchange offers and the transaction resulted and the issuance of approximately $38 4 million new shares of our common stock.
Additionally from December eight 2020 through February of 'twenty. Three 2021, we entered into privately negotiated exchange agreements with certain holders of our preferred stock to exchange and additional approximately $13 1 million shares of common stock for approximately $2 three.
And shares of preferred stock.
Through these exchanges, we've exchanged approximately 41% of our original preferred stock and the common stock.
After taking into account the $200 million of new corporate debt that we closed on in January we have lowered our outstanding debt plus preferred equity by over $430 million since the beginning of the pandemic.
During the quarter. We also entered into an equity line with Lincoln Park capital.
During the fourth quarter and into the first quarter of 2021, we issued approximately $10 6 million shares of common stock under the equity line raising approximately $25 $1 million of net proceeds.
Also subsequent to quarter end, we entered into a standby equity distribution agreement or Cedar with Yorkville pursuant to which we have the right to sell up to $13 7 million shares of our common stock.
To date, we have issued seven 5 million shares under the seta for approximately $22 million and proceeds.
At January we also sold of small hotels on the Meridian and Minneapolis for $7 3 million and net proceeds.
Over the past several months, we have taken multiple steps to strengthen our financial position and improve our liquidity and we are very happy with the progress that we've made.
While we still have work to do to decrease our leverage we believe the company is now well positioned to benefit from the improving trends, we are starting to see and the lodging industry.
This concludes our financial review I would now like to turn it over to Jeremy to discuss our asset management activities for the quarter.
Thank you Derek comparable revpar for our portfolio decreased 71% during the fourth quarter of 2020.
While hotel EBITDA flow through was a solid 55, 6%.
And this pandemic has been the most difficult challenge our industry has ever faced but we're optimistic that the worst is behind us.
With the rollout of vaccines accelerating and People's desire to travel again, we're starting to see an acceleration and bookings including corporate demand.
I've said this several times over the years and I'll say it again, because it is true.
I believe we have the best asset management team and the hotel industry.
These associates along with the employees at our hotels, we are on the front lines when the pandemic hit and had a lot of long and difficult days and 2020.
One of the hardest things you've had to do as an organization. This past year was to work with our property managers to reduce labor cost quickly when it became clear that our hotels would be losing money for an extended period of time.
On a full year basis, our asset management team reduced labor and employment taxes and benefits by approximately $191 million that reflects a 53% reduction when compared to 2019 and also compares favorably to the industry average of at 50% reduction According to Smith travel research.
As we look ahead, and we're already seeing demand return and some key markets, Florida as one market at the standout in terms of recovery and demand.
Hotels, and Florida had occupancy of 46% during the fourth quarter compared to the entire portfolio occupancy of 31%. We believe that a good portion of this outperformance has to do with the drive to nature of these hotels and a lot of restrictions that the state has put in place compared to the rest of the country.
On the pace of hotel in key West is a great example of the demand recovery, we're seeing in Florida that hotel actually ran higher occupancy and the fourth quarter and in the prior year quarter.
Another factor that resulted in improved demand for some of our hotel was of wildfire fires in California.
And number of our hotel property.
Hosted displaced transient guests firefighters and other groups the Hilton Scotts Valley, Santa Cruz was one hotel and benefited from the wildfires by hosting at group of firefighters.
And this group helped drive occupancy to 72% during the fourth quarter and resulted in revpar being down only 7% compared to the prior year quarter.
Moving on and capital management over the last few years, we have invested significant capital and renovating our portfolio to maintain competitiveness.
This is obviously important after the pandemic hit and.
And we needed to conserve as much cash as possible.
With our portfolio and good shape from a physical product standpoint, and limited capital available for capital expenditures, we are very selective and how we allocated capital during the fourth quarter, we completed the ballroom and meeting space renovation at the Hyatt Savannah to ensure the hotel is well positioned for the return of group business.
Looking ahead to 2021, we believe our portfolio is in good shape to benefit from the return of lodging demand.
Before moving to Q&A I, just want to mention and we are excited about the future of this portfolio, we continue to see our bookings.
And have even seen a slight increase and the trend for corporate demand. We're optimistic that this trajectory will continue to increase as we get further into 2021.
That concludes our prepared remarks, we will now open the call up for Q&A.
Thank you at this time, we'll be conducting a question and answer session.
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One moment, please while we poll for questions.
First question is from Tyler Batori share.
<unk> capital markets. Please go ahead Sir.
Hi, good morning, Thank you.
First question, just broadly on liquidity and congrats.
On the progress you've made on on that front.
You mentioned on the prepared remarks, the runway of the capitalized on the recovery of the industry.
And you expand and talk a little bit more about that what sort of avenues, and you're considering and what might be some of the trigger points.
In terms of making some of those decisions.
Sure. Thanks Tyler.
I'll start by saying, we as we sit here now and I think for some of Derek's comments, we think that our interest expense is about $11 million of months, our G&A is for and our property as of the fourth quarters and about $3 million for getting close to breakeven on a property level hopefully youre soon so we're about $18 million.
Of monthly cash burn.
Assuming that and assuming the various liquidity that we have via the oaktree financing and other cash on our balance sheet, we've got probably two and half to three years of of runway just if nothing else changes and we don't access any more capital than we say here today. So that's a lot of runway of lot of liquidity and we feel very good about.
I think for US the issue is less about having ongoing liquidity and it's more about looking at the long way long term.
Balance sheet health and our need to re.
Recapitalize the company and a way that's more consistent with with something that is healthy over the long term and so I think for us to focus really has changed from liquidity too.
What is the balance sheet that we want to have.
And the next three to five years and so that's going to be something that's going to take some time, but it's going to be vs.
A combination of of <unk>.
<unk> strategically selling some of our lower quality assets over time.
B continuing with some.
And these preferred exchanges that we're doing to grow our equity base.
It's going to be Opportunistically, raising capital equity capital as appropriate and and what we think is the most cost efficient way.
And it's going to be potentially opportunities to go on the offense and buy assets, either with lower leverage or no leverage to grow out of it that way as well, so theres going to be a variety of levers as we sit here now some of it is going to really depend upon what happens and the equity markets over the next six months for 12 months or two years and what happens and the trends.
<unk> markets, and we are putting ourselves in a position where regardless of what that.
And what the opportunities look like we're going to be ready to pounce on them when they come and add one more thing is when robison joined as the CEO and I think in May of last year, we put together a plan that at.
And looking back we really executed very well.
Across that plan as we recapitalized balance sheet and the preferred exchanges all of those things and laid out in may of last year and as we stand here today and look back debt, how bad things were and how much adversity and challenges. This at this company has been through and our management team and our associates at.
We're very very proud on what we've accomplished to date and we're very confident that we will continue to be prudent on executing that plan to continue to add value for our shareholders.
Okay very helpful and then shifting gears to <unk>.
And the operational environment out there can you elaborate a little bit more on what youre seeing with corporate demand and I think you cited an increase and trends for that business of interested where that demand is coming from and then I'm. Also curious if you can speak to group business, especially second half of of this year as well.
Sure. So the corporate demand. It's we think we've hit the trough and we think that we're now seeing.
And finally, some trajectory of growth now at tends to be.
It is not a lot and frankly and.
And as we were actually going through with some of our property managers of the other day and looking at the mix of the business you are seeing.
Small trends I don't know Tyler if it's enough to frankly to quantify that.
And that much other than.
We think.
It's moving up in terms of and in the second half of the year.
Pace for us is at.
And it's materially better than it is the first two quarters I mean, obviously the first two quarters are.
Our struggle from a from a pace perspective again, one thing to remember is that we arent a group focused company less than 20% of our business. Historically is group. So we are much more transient house.
But I think what we're seeing right now from PC and standpoint, and the second half of the year is call it down 30%, 20%, 30% from of pay standpoint.
But frankly I don't know how meaningful that is theres just so much that can happen between now and then and again even of groups that we tend to focus on are not large conventions.
Smaller group meetings weddings, those sorts of things that don't have quite the same.
Kind of lag that big of group is so on.
So a little bit of information, but it's not at me. So I think we're seeing some pent up demand.
And you see it and the leisure side, where as soon as some markets open and.
Individuals that want to travel feel safe to travel.
Continuing on our Florida markets that Theres, a lot of leisure demand, but youre, starting to see that a little bit and corporate as Rob mentioned I definitely believe that.
And I believe and hope that we've hit the bottom and we're starting to see that upward trajectory, but one of the things that we see and group as debt.
As of genetic has extended.
Cancellations.
But a lot of that group business, just does not want to cancel because they want to meet and want to to have their meetings and they want to have their weddings and so those cancellations are becoming.
And much more last minute then maybe earlier in the pandemic and its just because people are insistent that they want to continue to meet and and so we will see as we get through this you'll see much less cancellations and hopefully a lot more bookings on a short term basis right now the visibility of our business more than ever.
<unk> has been very very short term and and and so theres not a lot of long term trends that we can say other than the hotel at the hotel industry is always a resilient and recovery and every time, we've looked at and recovery in the past I think that the industry experts have under estimated the pace of that recovery and.
I believe that's going to be the case for this rebound as well.
Industry estimates of probably underestimate the pace of the recovery just because this is not at economic.
And.
The recession, it was pandemic and so as we get the vaccine out and you get to.
Herd immunity there will be.
The American people are resilient and they will travel again, and we will have people stay at our hotels.
More and more every day every month, hopefully gone for and Tyler one nugget is that as of right now approximately 70% of our bookings are for bookings within five days.
So it's.
And it's short term right now so just hard to get too much.
Too much color on from an outlook standpoint, given the booking windows.
Okay.
Great. Okay. That's all from me thank you for the detail.
We have a question from Michael Bellisario with Robert Baird and company. Please go ahead Sir.
Good morning, everyone.
Good morning.
First one for you just on the Oaktree investment.
And what flexibility do you guys have to sell assets and then eventually repay at the repay the preferred accrual of and kind of how are you thinking about those two options today sure. So theres a couple of different buckets that we have as part of the Oaktree financing.
We do have the ability to sell some amounts I believe its $50 million a year of proceeds up to $125 million and total that could go towards operating on.
Operating shortfalls and losses. So there is some flexibility that if we need to do to fund liquidity via asset sales, we do of the ability to do that.
And then we have the ability to sell assets.
Beyond that but the those proceeds will have to go towards paying them down.
It does avoid any sort of call protection that they would have so there is some benefit to it and that way versus if we're.
And otherwise at some call protection.
So that's a possibility as well as we think about.
The next couple of years at adds values continue to recover and as some of our debt will be closer to maturity does it makes sense to sell some of our of lesser quality pools in order to help fund the repayment of of.
Oaktree.
Again, I think we are also looking at on the broader strategy.
Mike and powder again to restructure of the balance sheet over time and.
And and get us to a place where we are at.
At leverage levels and liquidity levels that are more sustainable over time.
On the preferred.
And again.
Just on being able to repay the preferred accrual.
Yes, I think for the preferreds, obviously, we've been continuing to do some of these three nine transactions, which we think is a real benefit for our shareholders.
For our common shareholders, because we are able to take those rules out and.
And have been buying by and large these preferreds at discounts and sometimes substantial discounts to par value.
And so we do.
We have obviously avoided now taken out of 40% of our preferreds at a pretty significant amount of accruals, but yes, I would like to at some point and time and be able to address all of these preferreds.
Because it is something that we need to do and get the preferreds current in order to eventually get este eligibility back to be able to.
To be able to have.
All of the tools that we need from our equity standpoint in terms of having an ATM and other things in place.
Got it that's helpful and then just.
That's kind of turned the clock back to the last downturn you guys created a lot of value with interest rate swaps and Florida was and a few other things.
You guys thinking about anything like that today or what options do you have to kind of bolster cash flow or create value through I guess at.
At call it non hotel related investments.
No right now we're focused on the hotel business and we're focused on simplifying our capital structure, we're focused on simplifying our investment strategy and we've.
We've done a lot of the heavy lifting that we've needed to do in order to to put the company and a place to thrive and and participate in the recovery and so right now we're not frankly.
And frankly spending really much time at all looking at.
And at hedges and whatnot, we're focused on trying to.
Trying to just put the company and a good place, though that is the reason why we of floating rate debt and it is the reason why.
94% of our debt is floating because we do think rates are going to stay low for some time, that's something we we think it's a better pairing of our assets and liabilities and obviously floating rate debt tends to provide more flexibility than long term fixed rate debt. So I think youre going to continue to see is half of floating rate debt exposure.
Because of all of the various benefits, but right now we're not spending.
Really any time on.
Complicated hedging or other financial instruments, and I would just add Mike debt.
And to the point about the interest rate derivatives I think the big lessons learned from US from the last cycle was that we wanted to of floating rate debt and we wanted to have a lot of cash our balance sheet.
Both of those we had going into this obviously the pandemic was a much worse of of downturn than anybody ever anticipated happening and our industry.
Which put us in a tough spot given our leverage but having said that from here.
We're very active refinancing of lot of our debt going into this and as we sit here today have a pretty attractive maturity schedule looking forward and that debt will be a pretty decent asset coming out of this at the very attractively priced financing and as Rob mentioned at.
So from that perspective, we do feel like we're relatively well positioned.
Understood. Thank you.
We have a question from Kyle mangoes.
All of these securities. Please go ahead Sir.
Hi, Good morning, and this is Kyle on for Brian I, just had a follow up on the preferred.
What did you say that investors are still receptive to that five five for one exchange ratio and then also you mentioned a common share count number earlier in your remarks, I just wanted to check and does that account for.
All of the preferred to Tom and exchanges you've done to date.
Well, let me start and I'll have Derek jumping in and second on the preferred exchanges. We obviously had our actual offering that was completed in the fall, which had at set ratio of 558 times and with that we traded out about 30% of those preferreds.
Net operating at was complete and done and finished and so everything subsequent to that is just a private transaction and I'll call. It three eight and nine transaction of which that's just a private negotiation between us and any of our existing preferred holders.
And so that it's not something that we slipped.
So, let's say, it's on something that we.
That's a widely distributed offer them and that's just something that we negotiate privately with our with our preferred shareholders. So I can't really comment on their receptiveness or non receptiveness, because it's because of just one off transactions within with different existing preferred holders.
But yes from our perspective.
Continue to be attractive because we're able to as Rob mentioned exchange of preferred out at a potentially at a discount to par and even more so the accrued preferred dividend then goes away. So there.
And there continues to be some benefit there in terms of the share count that I quoted and my and my remarks on the preferred shares that was as of or through February 23rd So that's.
And the most recent data we could give in terms of the current share count.
Great. Thank you and then it looks like you have five more hotels, but you've got to find agreement on just just curious how the conversations are going on with lenders, maybe the key sticking points and.
If youre also possibly exploring.
Sales of any of those hotels.
Sure we've got.
We've got a few hotels left I think we are and I would say a good place with the Servicers, we and in many cases have kind of a handshake terms, but they are not yet fully documented.
That's really the process is that it's just a long process of getting documents and going back and forth with lawyers, but I think we feel pretty good about what's remaining.
Thanks, that's all from me.
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We have a question from Chris <unk> Deutsche Bank. Please go ahead Sir.
Hey, good morning, guys.
Rob.
Graduations on the progress to date on on.
And the preferreds and I think you said, 41% can.
Can you talk a little bit about your pipeline I know everything is privately negotiated but I mean is it fair to say you're actively working on.
Another chunk of those or how would you describe the low.
The general process on and get more of those redeemed at.
And Chris I can't I can't comment on those just because they're private transactions and.
And it's just ones that we respond to inquiries from existing preferred shareholders. So.
I can't really provide color on you said were at.
Can't say as our our goal is to simplify our capital structure and wed like to.
And we'd like to over time remove these preferreds and order to remove these accruals and provide greater liquidity to our common shareholders, because we do think thats a and.
And from a long term perspective, and as we were sitting here in the fall and our equity market cap at times was and the very low double digits and as Derek highlighted in his and his comments and we're well over 300 million near $250 million of of.
Of equity.
Share common equity value today, which is a huge step and the right direction for us.
And our shareholder liquidity, if you look at our trading volume at.
And is materially improved from I think where I mean, where it was even prior to all of this.
And that's some good opportunities for our shareholders to be able to take positions to build and best in the company.
And and and participate in and the upside as we go through the cycle.
It's just difficult to comment on private exchanges, because I don't control them.
We just listen to people and negotiate them as best we can but we would like to remove as much of the preferreds. These accruals as possible. One thing I'd add is at I think that Derek and Robert both debt very prudent in terms of what they've negotiated.
And making sure that it is accretive to our common shareholders and so we're not going to do on <unk>.
Change it just doesn't make sense for for the common and debt.
And just given the relative trading between the preferred and common at actually is a situation where we've done the preferred of changes where it is a win win for both sides of investor and and for Ashford Trust as a company and our common shareholders.
So as long as at exists we think that there is going to be potentially more demand from investors to continue to pursue three and nine transactions.
Okay Fair enough I appreciate that and then.
Looking forward a little bit you have done a lot of heavy lifting on on getting the balance sheet fixed and I know youre not done yet but simple.
We are supposedly very early in the next lodging cycle.
What kind of appetite might you have to.
To look at acquisitions and essentially over equity raise them as a way to kind of buy.
Some some real time cash flow is that something that's on the table.
Well I think the answer is yes, it's on the table, but doing so and a way that makes sense for our shareholders and the long term health of the company that's to be seen right. It depends on what happens to our share price over the next months to come what are the opportunities that are out there, but but it is one of the levers that we would look.
Paul and like I said, I think our goal and as we've learned over the last 12 months in addressing all of the various issues. We've had to as we had to go down three or four of five pass at the same time in order to be able to adjust and pivot depending upon what's going on and the circumstances and I think it is going to be something.
Similar where we are going to have three or four of five or six different ways to help the balance sheet to be able to grow and depending upon what happens and the market what happens and the pacing of the recovery and we're gonna be prepared to jump on whatever is that opportunity one thing I'd also say debt.
The silver lining of this crisis is that it did put us in front of and build a lot of relationships with great potential capital partners and capital providers.
And and so I think we're hopeful and given we've got our broader platform here.
At Ashford with where we've got the operating side of the house and not just the ownership side of the house, where I think it opens our platform at Ashford Trust open to potentially pairing up with some great capital providers and partners to go out at and do deals. In addition to just on our balance sheet alone.
Okay. Thanks, Rob maybe just one quick one for Derek Derek.
Eric as you guys worked through the.
Some of the forbearance agreement was there any opportunity for maybe fixed and.
Fixed some of the debt just with what we're seeing now and the market with interest rates and still low historically, but.
Is there an opportunity or would you look to do something to fix and a little bit of at if we're if we are moving higher on on long term rates.
And our price it wasn't really something we explored that deeply.
No our preference thats kind of always been to stay at the shorter end of the curve and we've just always at a preference for being of floating rate borrower.
And when you lock and stub at tends to tie our hands in terms of prepayment flex prevent of penalties or of the flexibility to do something opportunistic and the.
Debt markets continue to get better.
And kind of rewind the clock six months or so it was a little unclear on what the debt capital markets for hotels were going to look like as we sort of came out of the pandemic, but as we sit here today the market seems like it's getting better every day for our property level financing and.
And frankly, we're in a good spot, where we don't have a ton of refinancings that we need to do.
But for the few ones that we do need to do we're going to be a little patient because the market just keeps getting better there is plenty of capital out there and I think we're again Derek and his team did a great job of building up the maturity ladder that we have because.
As we as we look to this year, where we've got Crystal Gateway and next year, We've got Boston back Bay. Those are both assets that are very very high quality assets.
Ample equity value in them.
And so we feel very confident about the.
We don't really have any material of maturity refinancing risks, which is great.
And the one thing that we are focused on which is obviously several years in advance and mentioned I'll limit. My comments is we do have some pools that have extension tests that have debt yield tests that are in 2023 of 2024, and we don't know for certain that that those are going to be issues at all but we want to be proactive in addressing those which.
And why we highlighted that and two of our bigger pools at JP Morgan a pool and our <unk> pools, why those forbearance arrangements got delayed a little bit and they're closing because as we as we finalized and new and felt certain that we're going to close the transaction with Oaktree. We knew that we now had an opportunity to potentially.
Modify those forbearance arrangements in order to modify those debt yield extension tests and so we are going to be focused on that on some of our other pools that have extension tests in two years of three years of for years to see if we can work with our lenders and servicers to modify those as needed.
Okay.
Helpful. Thanks, guys.
Ladies and gentlemen, we've reached the end of the question and answer session and I'd like to turn the call back over to management for closing remarks.
Thank you everybody for joining us on the call and we will talk to you again next quarter.
This concludes today's conference you may disconnect your lines at this time and thank you for your participation.
Yeah.