Q4 2023 Ashford Hospitality Trust Inc Earnings Call
Operator: Good morning everyone and welcome to today's conference call to review results for Ashford Hospitality Trust for the fourth quarter and full year 2023 and to update you on recent developments. On the call today will be Rob Hayes, President and Chief Executive Officer, Deric Eubanks, Chief Financial Officer, and Chris Nixon, Executive Vice President and Head of Asset Management. The results as well as notice of accessibility of this conference call on a listen-only basis over the internet were distributed yesterday afternoon in a press release. At this time, I remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the Federal Securities Regulations. Such forward-looking statements are subject to numerous assumptions and certainties and known or unknown risks, which could cause actual results to differ materially from those anticipated.
Good day, everyone and welcome to today's conference call to review results for Ashford Hospitality Trust for the fourth quarter and full year 2023 and to update you on recent developments on the call today will be Rob Hayes, President and Chief Executive Officer, Derek Eubanks, Chief Financial Officer, and Chris <unk> Executive Vice President and head of asset management.
The result as well.
This conference call on a listen only basis over the Internet were distributed yesterday afternoon in a press release.
At this time I remind you that certain statements and assumptions in this conference call contain or are based upon forward looking information and are being made pursuant to the safe Harbor provision of the federal Securities regulation.
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.
Operator: These factors were fully discussed in accompanying filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or solicitation of an offer to buy any security. Securities will only be offered by means of a registration statement and a prospectus, which can be found at www.sec.gov.
These factors are more fully discussed in the company's filings with the Securities and Exchange Commission.
The forward looking statements included in this conference call are only made up of the date of this call and the company is not obligated to publicly update or revise them statements made during this call do not constitute an offer to yourself or towards patient of an offer to buy any securities.
Eagle will only be offered by the Earth station statement and prospectus, which can be found at www dot FCC dot Gov.
Operator: In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company's earnings release and in company tables or schedules, filed in Form 8K with the SEC on February 28, 2024, and may also be accessed through the company's website at www.htreet.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare the fourth quarter and full year ended December 31st, 2023 with the fourth quarter and full year ended December 31st, 2022. Now, I'll turn the call over to Rob Hayes. Please go ahead, sir.
In addition, certain terms is I'll call are non-GAAP financial measures reconciliations of which are provided in the company's earnings release and accompanying tables or schedule.
Have been filed on form 8-K with the FTC on February 28, 2024, and May also be asked at the company's website at Www Dot <unk> Dot com.
Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release.
Also unless otherwise stated all reported results discussed in this call compare to fourth quarter and full year ended December 31st 2023, with the fourth quarter and full year ended December 31 2022.
I'll now turn the call over to Rob Hey, Please go ahead Sir.
Rob Hayes: Good morning. Welcome to our call. After my introductory comments, Deric will review our fourth quarter and full year financial results, and then Chris will provide an operational update on our portfolio. As we announced earlier this year, we are keenly focused on paying off our strategic corporate financing in 2024. We believe this is a crucial step in positioning Ashford Trust back on the path of growth and is necessary in order to reinstate a common dividend in the future. Our plan to accomplish this is multifaceted and provides us with significant optionality to accomplish our goal.
Rob Hey: Good morning, welcome to our call.
Rob Hey: After my introductory comments, Eric will review, our fourth quarter and full year financial results.
Rob Hey: Chris will provide an operational update on our portfolio.
Rob Hey: As we announced earlier this year, we are keenly focused on paying off our strategic corporate financing in 2024.
Chris: We believe this is a crucial step in positioning Ashford trust back in the path of growth that is necessary in order to reinstate the common dividend in the future.
Chris: Our plan to accomplish this is multifaceted and provides us with significant optionality to accomplish our goal.
Rob Hayes: It includes raising sufficient capital through a combination of asset sales, mortgage debt refinancings, and non-traded preferred capital rates. We currently have more than a dozen assets at various stages of the sales process. And while we're unlikely to sell all of those assets, we are working diligently to determine which assets are capturing the most attractive valuations, while also providing the largest impact on our deleveraging efforts.
Chris: Includes raising sufficient capital through a combination of asset sales mortgage debt refinancings, and non traded preferred capital raising.
Chris: We currently have more than a dozen assets at various stages of the sales process.
Chris: And while we are unlikely to sell all those assets, we are working diligently to determine which assets are capturing the most attractive valuations.
Chris: So providing the largest impact to our deleveraging efforts.
Rob Hayes: We now have five assets under signed purchase and sale agreements, up from the three we announced several days ago, and another asset under a letter of intent. These six assets have a combined sales price of approximately $225 million. As a demonstration of the significant progress we are making in these efforts, this morning we announced we have signed a definitive agreement to sell the 390-room Hilton Boston Back Bay in Boston, Massachusetts, for $171 million, or $438,000 per key.
Chris: Now have five assets under signed purchase and sale agreements up from the three we announced several days ago and another asset under letter of intent.
Chris: These six assets have a combined sales price of approximately $225 million.
Chris: As a demonstration of the significant progress we are having in these efforts. This morning, we announced we have decided we signed a definitive agreement to sell the 390 room Hilton Boston back Bay of Boston, Massachusetts for $171 million or $438000 per key.
Rob Hayes: When adjusted for the company's or our anticipated capital expenditures, the sales price represents a 7.3% cap rate on 2023 net operating income, or a 12.3 times 2023 hotel EBITDA. The sale is expected to be completed next month, in March, and is subject to normal closing conditions. We expect the net proceeds from the sale to be approximately $70 million after the repayment of the underlying mortgage debt and the closing costs, and we anticipate using the net proceeds to pay down our strategic financing. In addition, subsequent to the quarter end, we announced that we've signed a definitive agreement to sell our residence in Salt Lake City, Utah, for $19.2 million. That sale is expected to be completed here early March and is subject to normal closing conditions. When adjusted for anticipated CapEx, the sale price represents a 4.6% NOI cap rate on 2023 net income, or 18.2 times the 2023 Hotel Ibada multiple. We expect to use all the proceeds from this transaction to pay down debt.
Chris: When adjusted for the companies are our anticipated capital expenditures.
Chris: <unk> price represents a seven 3% cap rate on 2023, net operating income or a 12 three times 2023 hotel EBITDA multiple.
Chris: The sales expected to be completed next month in March.
Chris: And is subject to normal closing conditions.
Chris: We expect the net proceeds from the sale to be approximately $70 million after repayment of the underlying mortgage debt and a closing cost.
Chris: Dissipate used the net proceeds to pay down our strategic financing.
Chris: In addition, subsequent to the quarter end, we announced that we signed a definitive agreement to sell our residence in Salt Lake City, Utah for $19 2 million.
Chris: Net sales expected to be completed here.
<unk> early March and subject to normal closing conditions.
Chris: Adjusted for anticipated Capex the sales price represents a four 6%.
Chris: Cap rate on 2023 net income.
Chris: Or $18 two times 2023 hotel EBITDA multiple.
Chris: We expect to use all the proceeds from this transaction to pay down debt.
Rob Hayes: We're also working with lenders to refinance a loan secured by the Renaissance Nashville in Nashville, Tennessee. The Morgan Stanley Pool alone has 17 hotels located in several states. The loan secured by the Marriott Gateway in Arlington, Virginia, and the loan secured by the Indigo Atlanta in Atlanta, Georgia. We believe there could be substantial excess proceeds from the refinancing of a Renaissance Nashville loan, which could be used to pay down the company's strategic financing. The Princeton-Weston, which we are currently running a sales process on, will be unencumbered as part of this financing to the extent that it is complete.
Chris: We're also working with lenders to refinance the loan secured by the Renaissance Nashville, and Nashville, Tennessee.
Chris: Stanley Pool loan was 17 hotels located in several states.
Chris: The loan secured by the Marriott Gateway in Arlington, Virginia, and a loan secured by the Indigo Atlanta in Atlanta, Georgia.
Chris: We believe there would be substantial excess proceeds from the refinancing of Renaissance Nashville loan, which can be used to pay down the company's strategic financing the.
Princeton Westin, which we are currently running the sales process on will be unencumbered as part of this financing to the extent that is completed.
Rob Hayes: We also continue to be excited about our non-traded preferred stock offering. We continue to build the selling syndicate and currently have 42 signed dealer agreements representing over 5,840 representatives selling the security. To date, we've raised approximately $105 million in gross proceeds, including $21.9 million during the fourth quarter. Given the progress we are making across these three main thrusts of our strategic financing payoff plan, which are asset sales, mortgage refinancing, and the non-trade preferred offering, we continue to believe that we are on the right path to pay off this strategic financing in 2024.
Chris: We also continue to be excited about our non traded preferred stock offering we continue to build the selling syndicate and currently have 42 signed user agreements representing over 5840 representatives selling the security to date, we have raised approximately $105 million of gross proceeds including $21 $9 million during the fourth.
Chris: Quarter.
Chris: Given the progress we're making across these three main thrust of our strategic financing payoff plan for asset sales mortgage refinancings in the non traded preferred offering.
Chris: Continue to believe that we are on the right path to pay off the strategic financing in 2024.
Rob Hayes: In terms of hotel performance, we are very pleased with the strong operating performance and rep-par growth we achieved in the fourth quarter. We're clearly seeing the benefit of a broadly diversified, high-quality portfolio that's balanced across leisure, corporate, and group demand sources. RevPAR for all hotels in our portfolio increased 1.6% in the fourth quarter compared to the prior year quarter. This RevPAR growth was led by average daily rates, which increased 3.4% over the prior year quarter. We are also pleased that this strong performance is continuing into 2024 with our January total revenue growth of 5.3% for the portfolio. I will now turn the call over to Deric to review our fourth quarter financial... Thanks, Rob.
In terms of hotel performance, we're very pleased with the strong operating performance in Revpar growth, we achieved in the fourth quarter. We're clearly seeing the benefit of our broadly diversified high quality portfolio that is balanced across leisure corporate and group demand sources revpar.
Chris: Revpar for all hotels in our portfolio increased one 6% in the fourth quarter compared to the prior year quarter as Revpar growth was led by average daily rates, which increased three 4% over the prior year quarter.
Chris: We are also pleased that this strong performance is continuing into 2024 with our January total revenue growth of five 3% for the portfolio.
Chris: I will now turn the call over to Derek to review, our fourth quarter financial performance.
Derek: Thanks, Rob for the fourth quarter, we reported a net loss attributable to common stockholders of $31 $3 million or <unk> 90 per diluted share.
Deric S. Eubanks: For the fourth quarter, we reported a net loss attributable to common stockholders of $31.3 million, or 90 cents per diluted share. For the full year, we reported a net loss attributable to common stockholders of $193.7 million, or $5.61 per diluted share. For the quarter, we reported AFFO per looted share of negative 36 cents, and for the full year, we reported AFFO per diluted share of $0.72.
Derek: For the full year, we reported a net loss attributable to common stockholders of $193 7 million or $5 61 per diluted share.
Derek: For the quarter, we reported <unk> per diluted share of negative <unk> 36.
Derek: And for the full year, we reported <unk> per diluted share of <unk> 72.
Deric S. Eubanks: Adjusted EBITDA R.E. for the quarter was $62.5 million, and $324.5 million for the full year. At the end of the fourth quarter, we had $3.3 billion of loans with a blended average interest rate of 8%, taking into account in-the-money interest rate caps. Considering the current level of SOFR and the corresponding interest rate caps, 92% of our debt is now effectively fixed, as almost all of our interest rate caps are now in the money.
Adjusted EBITDA for the quarter was $62 $5 million and $324 5 billion for the full year.
Derek: At the end of the fourth quarter, we had $3 3 billion of loans with a blended average interest rate of 8% taking into account in the money interest rate caps, considering the current level of sulfur and the corresponding interest rate caps.
Derek: 92% of our debt is now effectively fixed as almost all of our interest rate caps are now in the money.
Deric S. Eubanks: During the quarter, we extended our Morgan Stanley Loan Pool, secured by 17 hotels, which we extended for one year with no paydowns. We ended the quarter with cash and cash equivalents of $165 million and restricted cash of $146 million. The vast majority of that restricted cash is comprised of lender and manager-held reserve accounts, with two and a half million dollars related to trapped cash held by lenders.
Derek: During the quarter, we extended our Morgan Stanley loan call secured by 17 hotels, which we extended for one year with no pay down.
Derek: We ended the quarter with cash and cash equivalents of $165 million and restricted cash of $146 million the.
Derek: The vast majority of that restricted cash is comprised of lender and manager held reserve accounts and.
Derek: $2 $5 million related to trap cash helped by lenders.
Deric S. Eubanks: At the end of the quarter, we also had $22 million 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. We ended the quarter with net working capital of approximately $209 million. As of December 31st, 2023, our consolidated portfolio consisted of 90 hotels with 20,549 rooms. At the end of the year, our share count consisted of approximately 39.4 million fully diluted shares outstanding, which was comprised of 37.4 million shares of common stock and 2 million OP units. In the fourth quarter, our weighted average fully diluted share count used to calculate AFFO per share included approximately 1.7 million common shares associated with the exit fee on the strategic financing we completed in January 2021.
Derek: At the end of the quarter. We also had $22 million 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.
Derek: We ended the quarter with net working capital of approximately $209 million.
Derek: As of December 31, 2023, our consolidated portfolio consisted of 90 hotels with 20 549 groups at.
Derek: At the end of the year our share count consisted of approximately $39 4 million fully diluted shares outstanding which is comprised of 37 4 million shares of common stock and 2 million op units.
Derek: In the fourth quarter, our weighted average fully diluted share count used to calculate <unk> per share included approximately $1 7 million common shares associated with the exit fee on the strategic financing we completed in January 2021.
Deric S. Eubanks: While we are currently paying our preferred dividends quarterly or monthly, we do not anticipate reinstating a common dividend for some time. As an update, during the quarter, we completed the transfer of ownership of the hotels that secured the Keys F loan pool to the lender, and we continue to work with the lender for the Keys A and Keys B loan pools on a consensual transfer of ownership of those hotels to the lender. At this time, we are unable to provide an estimate on the timing of when that transfer will occur. This concludes our financial review, and I would now like to turn it over to Chris to discuss our asset management activities for the quarter. Thank you, Deric.
Derek: While we are currently paying our preferred dividends quarterly or monthly we do not anticipate reinstating a common dividend for some time.
Derek: As an update during the quarter, we completed the transfer of ownership of the hotels that secured the keys loan pool to the lender and we continue to work with the lender for the keys and Keith B loan pools on a consensual transfer of ownership of those hotels to the lender.
Derek: At this time, we are unable to provide an estimate on the timing of when that transfer will occur.
Derek: This concludes our financial review and I would now like to turn it over to Chris to discuss our asset management activities for the quarter.
Chris: Thank you Derrick for the quarter comparable hotel Revpar for our portfolio increased one 6% over the prior year quarter, marking 11 consecutive quarters of year over year Revpar growth.
Christopher Nixon: For the quarter, comparable hotel REVPAR for our portfolio increased 1.6% over the prior year quarter, marking 11 consecutive quarters of year-over-year rep par. Full-year comparable hotel REVPAR increased 9.5% over the prior year. Our full-year Red Park growth was nearly double the national average.
Chris: Full year comparable hotel Revpar increased nine 5% over the prior year.
Chris: Our full year Revpar growth was nearly double the national average.
Christopher Nixon: I would like to take a few minutes to highlight some of the work from our team, including actively increasing our group position across our portfolio, strengthening our food and beverage outlets, and capitalizing on high-demand events in some of our major markets. Group room revenue for the full year exceeded the prior year by 16%. This was a strong quarter for group booking activity. We started the quarter with approximately $34 million in on-the-books group room bookings for the fourth quarter.
I would like to take a few minutes to highlight some of the work from our team, including actively increasing our group position across our portfolio strengthening our food and beverage outlets and capitalizing on high demand events in some of our major markets.
Chris: Group room revenue for the full year exceeded the prior year by 16%. This was a strong quarter for group booking activity, we started the quarter with approximately $34 million and on the books group room bookings for the fourth quarter during the fourth quarter, we added over $19 million and additional group room revenue.
Christopher Nixon: During the fourth quarter, we added over $19 million in additional group room revenue. As a comparison, on a more stable basis in 2019, we added just over $18 million in group revenue during the fourth quarter. As we enter the year, our group room revenue for 2014, for 2024, and 2025 is pacing up 8% and 13%, respectively. A hotel that had strong group performance this quarter was one of our largest hotels, the Marriott Crystal Gateway, where group room revenue grew by 21% compared to the prior year quarter. During the fourth quarter, the hotel was successful in increasing group room nights, which allowed the team to earn out lower rated transient and government per diem business. Much of the increased production occurred over the traditionally slower holiday pattern between Christmas and New Year.
Chris: As a comparison on a more stabilized basis in 2019, we added just over $18 million of group revenue during the fourth quarter.
Chris: As we entered the year our group room revenue for 2014 for 2024, and 2025 is pacing up 8% and 13% respectively.
Chris: Our hotel that had strong group performance. This quarter was one of our largest hotels, the Marriott Crystal Gateway, where group room revenue grew by 21% compared to the prior year quarter.
Chris: During the fourth quarter. The hotel was successful in increasing group room nights, which allowed the team to yield out lower rated transient and government per diem business.
Chris: Much of the increased production occurred over the traditionally slower holiday pattern between Christmas and new year's.
Christopher Nixon: Food and beverage revenue per occupied room grew by 8 percent, and food and beverage margin improved by 284 basis points compared to the prior year quarter. On a four-year basis, food and beverage revenue grew 18 percent, and food and beverage margin improved by 227 basis points compared to the prior year. This was led by the Hyatt Regency Savannah and Renaissance Nashville, which achieved full-year food and beverage revenue growth of 22% and 18%, respectively, compared to the prior year. Renaissance Nashville had a record-breaking year, with banquet revenue growing 24% compared to the prior year. The team was successful in backfilling lower-rated, citywide demand with self-contained groups that had higher banquet and catering... Hyatt Regency Savannah benefited from a great shopping initiative, which we ran across our entire portfolio. This initiative optimized menu prices by benchmarking comparable items across an array of menus. In addition, our team aggressively increased the required minimum spend on catering contracts.
Chris: Food and food and beverage revenue per occupied room grew by 8% and food and beverage margin improved by 284 basis points compared to the prior year quarter.
Chris: On a full year basis, food and beverage revenue grew 18% and food and beverage margin improved by 227 basis points compared to the prior year.
Chris: This was led by the Hyatt Regency, Savannah, and Renaissance, Nashville, which achieved full year food and beverage revenue growth of 22% and 18% respectively compared to the prior year.
Chris: Renaissance Nashville had a record breaking year with banquet revenue growing 24% compared to the prior year.
Chris: The team was successful in backfill in lower rated citywide demand with self contained groups that had higher banquet and catering spend.
Chris: Hyatt Regency Savannah benefited from a great shopping initiative, which we ran across our entire portfolio.
Chris: This initiative optimized menu prices by benchmarking comparable items across an array of vendors.
Chris: In addition, our team aggressively increase the required minimum spend on catering contracts.
Christopher Nixon: These efforts throughout the year helped us achieve full-year banquet revenue growth of 34% over the prior year. Additionally, several key markets within our portfolio had strong quarters. For example, our DT hotels, which make up 12% of our portfolio by key count, increased comparable hotel revenue by 6% during the fourth quarter compared to the prior year. During the fourth quarter, despite the headwinds related to the potential government shutdown, which resulted in occupancy declining 50 basis points, our hotels proactively remixed into non-government segments that drove rates by 6% compared to the prior year. Moving on to capital expenditures, in 2023, we completed the renovation of the Lobby and Bar at the Ritz-Carlton Atlanta, the meeting space at Embassy Suites Crystal City, and relocated the concierge lounge and added a premium suite at Renaissance National.
Chris: These efforts throughout the year helped us achieve full year banquet revenue growth of 34% over the prior year.
Chris: Several key markets within our portfolio had strong quarters for example, our DC hotels, which make up 12% of our portfolio by key count increased comparable hotel revpar by 6% during the fourth quarter compared to the prior year quarter.
Chris: During the fourth quarter, despite the headwinds related to the potential government shutdown, which resulted in an occupancy declined 50 basis points, our hotels proactively remix into nongovernment segments that drove rate by 6% compared to the prior year quarter.
Chris: Moving on to capital expenditures in 2023, we completed the renovation of the lobby and bar at the Ritz Carlton Atlanta, the meeting space at Embassy suites, Crystal City and relocated a concierge lounge and added a premium sweep and Renaissance Nashville.
Christopher Nixon: Across our entire portfolio, we spent approximately $110 million on capital expenditures in 2020, excluding development projects. For 2024, we anticipate spending between $85 and $105 million on capital expenditures. We reported external performance and revenue and profitability for 2023, and looking forward, group business is pacing favorably and positioning as well for the coming years. Food and beverage is strengthening, and we are increasing ancillary revenue capture. We continue to...
Chris: Across our entire portfolio, we spent approximately $110 million on capital expenditures in 2023, excluding development projects.
Chris: For 2024, we anticipate spending between 85 and $105 million on capital expenditures.
Chris: We reported outside performance in revenue and profitability for 2023, and looking forward group business is producing favorably and positioning us well for the coming years food and beverage is strengthening and we are increasing ancillary revenue capture we continue to evaluate several new initiatives across our portfolio such as additional brand conversions strategic.
Chris: <unk> hundred ships and high yield renovations.
Speaker Change: This concludes our prepared remarks, and we will now open up the call for Q&A.
Speaker Change: We are now opening the floor for question and answers if you'd like to ask a question. Please press star and number one on your telephone keypad.
Speaker Change: Our first question comes from Tyler Batori from Oppenheimer. Your line is now open.
Speaker Change: Okay.
Hi, Good morning. This is Jonathan on for David Thanks for taking our questions.
Jonathan: First one for me with the Hilton Boston back Bay announced this morning, and the $70 million of expected net proceeds does that change how you're thinking about the remaining potential asset sales and the dollar amount or number of sales that you would need to get comfortable paying off the <unk>.
Jonathan: It doesn't impact the overall analysis, obviously, what we're attempting to do is just keep as much optionality open as we can in terms of determining what's the right path to get the financing paid off and I'll see the net proceeds of $70 million is a decent sized chunk of being able to pay down.
Jonathan: The financing.
Jonathan: So yes, so it does kind of impacted again as we've said in our remarks, we're unlikely to sell all of these assets.
Jonathan: But just given how choppy sometimes the sales markets have been we've had for.
Jonathan: For example, a couple of the assets that were previously under LOI that fell through.
Jonathan: We just wanted to create as much optionality as we can now it does seem like the odds I think of getting some of these deals over the finish line continues to improve as the financing markets are improving and we're seeing that ourselves. We're in the market as we mentioned in our comments on.
Jonathan: On several loans and refinancings.
Jonathan: And so we have seen spreads come in we've seen rates come.
Jonathan: Come down a little bit so.
Jonathan: I think we are.
Jonathan: Hopeful that translates into the transaction market and we can get.
Jonathan: Handful of these assets over the finish line.
Jonathan: To be able to take out the financing.
Speaker Change: Okay excellent. Thank you for the color there and then switching gears to the refinancing.
Speaker Change: Maybe walk us through how you're thinking about that the gains that are potentially embedded there and any potential timing of when those refinancings could be completed.
Speaker Change: Sure I think most of the refinancings as we've mentioned are mostly like for like where they will just be kind of refinancings of existing.
Speaker Change: Existing proceeds levels.
Speaker Change: The exception to that is the Renaissance Nashville that we mentioned, where we do think we've got the ability to pull some what I at least consider material proceeds out of there and we're not talking one or $2 million, but potentially tens of millions of dollars.
Speaker Change: And at the same time unencumbered, Princeton, which is on our for sale asset list.
Speaker Change: We're able to sell that here in the next several months.
Unencumbered is obviously very helpful. And then we think can generate a sizable amount of proceeds given the performance of that asset will continue to improve.
Speaker Change: So we're looking and we've got a handful of these loans in the market for most of them, we'd like to get them done in the next 30 to 60 days.
Speaker Change: But again, we'll see how the fancy markets continued to.
Speaker Change: To move.
Speaker Change: Okay, Great I appreciate the color and then maybe last one for me.
Speaker Change: Rob I give you and the team a lot of credit for the communication and execution on the plan of first exiting the cash stress now working to take out the strategic financing can you maybe walk us through the playbook of what comes after that strategic financings taken out and we will the focus be on continued deleverage or maybe step on the growth pedal going forward of kind of how you're thinking about that.
Rob Hey: That's a good question and I think Thats also where we want to get focus here is to kind of move past this stage of the.
Rob Hey: The kind of the HG story and move into the next one.
Rob Hey: Why we're so focused on strategic financing and they've been great partners, but the capital has been expensive and.
Rob Hey: We think it is.
Rob Hey: At the demonstration that we're moving on to the next phase of the company.
Rob Hey: A combo of things I think one is at some point in time, we'd like to obviously turn our dividend back on.
Rob Hey: It's unlikely to be sizable right out of the gate, but its something where we wanted to signal some health in the company by turning on the dividend I do think this is a crucial part of why our non traded preferred and all of the partnership that we have with Ashford Securities is so important.
Rob Hey: Because we do see that as a potential growth capital.
Rob Hey: Glad to be able to go do deals that we like and to continue to grow on that side and then I do think youll see I think selective.
Rob Hey: Sales in order to de lever and that's I think predominantly to clean up the portfolio just continue to do.
Rob Hey: Invest in our higher quality assets assets, we think are longer term and we do have some assets.
Rob Hey: Some lower Revpar full service assets in a variety of select service assets that we don't think are necessarily key long term assets that we'd like to.
Rob Hey: Clean up over time so.
Rob Hey: There'll be several moving pieces here I think improving the portfolio continued to delever, but then going on offense with the help of Ashford securities' platform.
Speaker Change: Okay and I appreciate all the color. Thank you that's all for me.
Speaker Change: Thank you. Our next question comes from Michael <unk> from Baird. Your line is now open.
Speaker Change: Yes.
Good morning, everyone.
Michael: Our Nevada.
Michael: The first question the 220 $225 million of gross proceeds for.
Michael: Modeling purposes, how should we think about the net proceeds above and beyond the 70 for back Bay.
Michael: It is going to be probably.
Michael: Somewhere.
Michael: <unk>.
Michael: It's probably an incremental 15% to 20.
Speaker Change: That's helpful and then.
Speaker Change: We're thinking about you paying off Oaktree can you remind us.
Speaker Change: What's the exit fee, what's the calculation there how many more dollars might need to go out of your pocket above and beyond the.
Speaker Change: <unk> stated principal balance and then.
Speaker Change: Any other share dilution potential.
Speaker Change: Sure I think the the.
Speaker Change: Biggest factor in that is just really the exit fee and the exit fee is a total of 30% of the total principal balance that was drawn for 15% of the total principal balance that was drawn down which was $30 million and we currently have the ability to pay up to half of that in stock.
Speaker Change: So it's somewhere between $30 million of cash to $15 million of cash on top of the 183.
Got it understood and then.
Speaker Change: He didn't talk about it but.
Speaker Change: Sterling REIT that you guys have created I think it's proceeded with four assets.
Speaker Change: What are the longer term plans there is there a thought to contribute more assets.
Speaker Change: To that platform and then how should we think about the fund raising for that non traded REIT versus what youre trying to do at the corporate level for your non traded preferred fundraising.
Speaker Change: Sure Let me take the first part of that and I'll have Derek.
Speaker Change: Step in because he's more actively involved on the sterling side than I am.
Speaker Change: But.
Speaker Change: It was something where we ought to contribute those for select service assets, we thought.
Speaker Change: Those are very high quality assets.
Speaker Change: Its just not consistent with what we hope to be the long term strategy of Ashford Trust.
Speaker Change: And it was a way that we thought that potentially over time.
Speaker Change: Sterling is successful that there can be opportunities potentially to.
Speaker Change: Sell assets over there for trust.
Speaker Change: Potentially for cash, but as we sit here today, we've got kind of no intention I think to contribute more assets.
Speaker Change: <unk> it.
Speaker Change: It's something where it's just kind of a way to get them started there were some benefits to trust to again focus its strategy.
Speaker Change: But I'll, let Derek take kind of the longer term view of it in terms of the.
Derek: The Sterling hotels and resorts platform, Mike, It's it's a process to get that up and running we are raising capital through Ashford securities, which will.
Derek: Go through a network and a syndicate of broker dealers and <unk>.
Derek: And.
Derek: So thats a process that is being privately offered to accredited investors and.
Derek: We're optimistic that it's a pretty interesting way to raise capital in.
Derek: Especially with a scenario, we've got hotel rates that trade at a discount to NAV and we.
Derek: We can raise capital at <unk> and allow investors to have some liquidity to get out at NAV that we think it will be a pretty interesting.
Derek: Vehicle and structure for hotel investment going forward.
Speaker Change: Got it understood and then for the time being.
Speaker Change: Ht effectively owned 100% of the shares in <unk>.
Speaker Change: Through the P&L of those hotels logistics quoted from the comp base correct.
Speaker Change: Right so.
Speaker Change: It's not exactly 100%, but very close to 100% currently and then as we raised capital in that platform that ownership will be diluted down.
Speaker Change: I anticipate.
Speaker Change: So at the end of the fourth quarter those Sterling properties were consolidated on Ashworth finance, an Astro <unk> financial statements.
Speaker Change: That will be the case.
Speaker Change: All of that ownership is diluted down some so it's still kind of TBD on when those assets would become unconsolidated.
Speaker Change: Helpful. Thank you.
Speaker Change: Thanks, Michael.
Speaker Change: Thank you before we move onto the next question.
Speaker Change: If you'd like to ask a question to our presenters. Please press star and number one on your telephone keypad.
Speaker Change: <unk> is number one on your telephone keypad.
Speaker Change: Our next question comes from Bryan Bryan Mayer from B Riley Securities. Your line is now open.
Bryan Anthony Maher: Thanks, and good morning, just trying to clarify the math a little bit I think you said you had by that debt under purchase sale one of them.
Bryan Mayer: <unk>.
Bryan Anthony Maher: LOI. So six total of $225 million does that 225 includes the 171 from Boston, Yes, Yes, those are all combined.
Bryan Anthony Maher: And does that does that number also include the residence Inn in Utah, Yes.
Speaker Change: Yes, it does.
Speaker Change: Okay. So the other ones I kind of go on Nevada, a fairly low price.
Speaker Change: Sir the select service assets.
Speaker Change: Got it and you said that that some that were for sale. The transactions sell through can you give us any color as to kind of why some liquid would fall through.
Speaker Change: Mainly buyer here talking to benefits that you are still marketing or are they bigger entity that a local buyers.
Speaker Change: Yes, it's a good question I've actually been extremely encouraged by the kind of the breadth of buyers out there and.
Speaker Change: And it's basically exactly as you said I mean, it's a combination of.
Speaker Change: Private equity.
Speaker Change: Of a variety of sizes I mean, it's everything from the Big Boys that we all can name too.
Speaker Change: Smaller funds that have been started up kind of looking to get their foot in the door, maybe and maybe its groups that had started in select service assets.
Speaker Change: Looking to get into the full service side, but then as well as these assets are ones that do have kind of regional <unk> to them.
Speaker Change: There are a lot of local owner operators that are around Princeton, New Jersey that are in Florida. They are in the southeast and with Savannah.
Speaker Change: So we're finding a good mix of both.
Speaker Change: In terms of why things are falling out.
Speaker Change: It's been typically financing related.
Or kind of just.
Speaker Change: I don't know sometimes people get a little aggressive maybe in trying to lock up a deal and try to preempt the process and then once they kind of get into it a little bit.
Speaker Change: I realize maybe they got over their skis.
Speaker Change: <unk>.
Speaker Change: Each one kind of been its own little story, and it's only been a few of them.
But again that was one of the kind of the impetus to create again more optionality.
Speaker Change: To just see where we can get movement. So that we're not just.
Speaker Change: Executing trying to execute on one or two realized that process isn't going well or getting to the finish line and having that fall through and then have to start all over again, we're trying to be I think much more aggressive and thoughtful about.
Speaker Change: Putting lots of lines in the water.
Speaker Change: Those that can create value the quickest.
Speaker Change: Create proceeds for us to move on from the strategic financing then theyre going to win.
Speaker Change: So are the assets that you're marketing for sale are you looking at it purely on an economic standpoint, where you can get the most dollar bank via Buck or are there assets in there where youre looking to lighten up on a market for one reason or another.
Speaker Change: It's you are exactly right Brian both.
Speaker Change: The frustration that we have is is that.
Speaker Change: Those markets or that asset may not be the one getting the traction that I wish right and so that's kind of attention now.
Speaker Change: Let's say that we had equal interest and equal kind of value on all of the assets and yes, that's absolutely something where there's maybe certain assets that.
Speaker Change: A lot of Capex coming due maybe it's a franchise agreement expiring maybe you already have a lot of exposure there whatever it may be and that all things being equal I prefer that asset over another but then a day, we just have to kind of again put them all out there and see what we're what we're dealing with it from a market and transaction standpoint.
Speaker Change: Do the best we can to navigate both and there is obviously some of these assets that we're selling that I really like and that I would I would prefer to keep.
Speaker Change: But the reality is that we've got to generate some proceeds.
Speaker Change: So.
Speaker Change: I'm trying to try to minimize the number of the some of those assets at a sell and try to sell more of the ones that I'd prefer not to keep our reduced market exposure, but.
Speaker Change: We'll see how that process plays out in next couple of months.
And just last from me Unproved A&P. This process has been going on for like at least six months to seven months what is the hold the holdup on the banks, taking these back I mean, one would think that as long as the market is fairly decent out there and some hotels are transacting at that there are buyers that they would take these things and flip them.
Speaker Change: Whats holding this up yes, so I'll give you a little bit of color that hopefully because.
Speaker Change: Because I promise you.
Speaker Change: Your frustration in our shareholder's frustrations do not match our frustration.
Speaker Change: Sure.
Speaker Change: And so what happens at least there is a little bit of complication around them like one theyre CBS loans, and just when youre dealing with EC MBS trusts and youre dealing with the Servicers and special Servicers. They just arent empowered to move as quickly and make decisions as quickly as a balance sheet lender right. So there's just a certain amount of <unk>.
Speaker Change: Process in there.
Speaker Change: <unk> by the documents and they are loath to do anything outside of those documents just reliability reasons and whatnot. So there's a very I think.
Speaker Change: Defensive minded aspect to just the process itself.
Speaker Change: Keith F ended up moving a little bit quicker because one of the pieces someone was willing to step into the mezz.
Speaker Change: And buy it from one of the existing mass holders and therefore, it didn't have to go through kind of all of the same process right. They could step into it much more quickly via the meds, So thats why that moves.
Speaker Change: For this one.
Speaker Change: Yes.
Speaker Change: <unk> is one where it seems that the mezz isn't going to be participating in isn't going to be in it and so that in itself takes up time and process too.
Speaker Change: Basically move them out of the capital structure.
Speaker Change: Our understanding is that is <unk>.
Speaker Change: Recently been completed and so we are hopeful that that therefore is now clearing the path for this to move quicker, but as we said in our comments, we don't know and so.
Speaker Change: <unk> literally do not know if I get notified two day that this is going to be happening in SaaS or it's still going to be a little bit longer but what I can say is that there has been movement in some of this process and so we are hopeful that it will be soon but it's just a very.
Speaker Change: Complicated process and.
Speaker Change: We're just dealing with CBS.
Speaker Change: <unk> and special Servicers.
It just tends to be slow given the nature of the documents.
Thank you that's very helpful.
Speaker Change: As of right now we don't have any raised hands I'd now like to hand back over to the management with your final remarks, alright. Thank you everybody for your time on this call today, we are very committed to getting this strategic financing paid off we appreciate all your support.
Speaker Change: As we continue to execute on execute on this plant and we will talk to you during our next quarterly call.
Speaker Change: Thank you for attending today.
Speaker Change: Session. We hope you have a wonderful day.