DALLAS, Nov. 4 /PRNewswire-FirstCall/ -- Ashford Hospitality Trust, Inc. (NYSE: AHT) today reported the following results and performance measures for the third quarter ended September 30, 2009. The proforma performance measurements for Occupancy, Average Daily Rate (ADR), revenue per available room (RevPAR), and Hotel Operating Profit (or Hotel EBITDA) include the Company's 103 hotels owned and included in continuing operations as of September 30, 2009. Unless otherwise stated, all reported results compare the third quarter ended September 30, 2009, with the third quarter ended September 30, 2008 (see discussion below). The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.
FINANCIAL HIGHLIGHTS AND LIQUIDITY
-- Corporate unrestricted cash at the end of the quarter was $197.9 million
-- Total revenue decreased 22.7% to $220.6 million from $285.3 million
-- Net loss available to common shareholders was $33.6 million, or $0.52
per diluted share, compared with net income of $1.8 million, or $0.01
per diluted share, in the prior-year quarter
-- Adjusted funds from operations (AFFO) was $0.18 per diluted share
-- Cash available for distribution (CAD) was $0.09 per diluted share
-- Fixed charge ratio was 1.60x under the senior credit facility covenant
versus a required minimum of 1.25x
-- The company expects to close the refinancing of a $75 million loan, its
sole 2010 hard debt maturity (excludes the $29 million Hyatt Dearborn
loan due in 2010), together with a $65 million loan coming due in 2011.
CAPITAL ALLOCATION
-- Repurchased 6.3 million common shares in the quarter for a total of
$19.4 million
-- Capex invested in the quarter totaled $18.2 million
LOAN IMPAIRMENT CHARGES
During the third quarter of 2009, the Company elected to reserve for the remaining $9.1 million of its $18.2 million first mortgage participation in the Four Seasons Nevis due to additional uninsured costs incurred by the borrower and the delayed re-opening of the resort until 2010. The Company also announced it has signed a definitive agreement with the borrower on the Ritz Carlton Key Biscayne, subject to senior lender approval, to allow for a discounted payoff of the Company's $33.6 million loan that was to mature in 2017. If closing occurs, Ashford will receive $20 million in cash and a $4 million secured note that matures in 2017. The Company will reserve $10.7 million on this loan in anticipation of the discounted payoff. These reserves resulted in a non-cash impairment charge of $19.8 million, or $0.30 per diluted share, in the third quarter of 2009.
CAPITAL STRUCTURE
At September 30, 2009, the Company's net debt to total gross assets (as defined by the corporate credit facility) was 57.8%. As of September 30, 2009, the Company had $2.8 billion of gross debt with a blended average interest rate of 3.28%. Including its $1.8 billion interest rate swap, 97% of the Company's debt is variable-rate debt. The Company's weighted average debt maturity including extension options is 5.3 years and including the $29 millionHyatt Dearborn loan has only $104 million coming due before December 31, 2010 (the balance is in the process of being refinanced).
On July 1, 2009, the Company purchased two, one-year flooridors. The first flooridor, which is for a notional amount of $1.8 billion, is for the period commencing December 14, 2009, and ending December 13, 2010. Under this flooridor, the counterparty will make payments to the Company when LIBOR is below 1.75% but only down to LIBOR of 1.25% such that the counterparty's liability is capped at LIBOR of 1.25%.
The second flooridor, which is also for a notional amount of $1.8 billion, is for the period commencing December 13, 2010, and ending December 13, 2011. Under this flooridor, the counterparty will make payments to the Operating Partnership when LIBOR is below 2.75% but only down to LIBOR of 0.50% such that the counterparty's liability is capped at LIBOR of 0.50%. The Company paid a total of $22.3 million in upfront costs for the two flooridors and has no further liability under the flooridors to the counterparties.
On October 13, 2009, the Company purchased an additional flooridor for a notional amount of $2.7 billion with a term commencing October 1, 2009, and ending December 31, 2009. Under this flooridor, the counterparty will make payments to the Operating Partnership when one-month LIBOR is below 2.00% but only down to LIBOR of 1.00% such that the counterparty's liability is capped at LIBOR of 1.00%. The Company has paid $6.9 million in upfront cost for the flooridor and has no further liability under the flooridor to the counterparty.
PORTFOLIO REVPAR
As of September 30, 2009, the Company had a portfolio of direct hotel investments consisting of 103 properties classified in continuing operations. During the third quarter, 98 of the hotels included in continuing operations were not under renovation. The Company believes reporting its operating metrics for continuing operations on a proforma total basis (all 103 hotels) and proforma not-under-renovation basis (98 hotels) is a measure that reflects a meaningful and focused comparison of the operating results in its direct hotel portfolio. The Company's reporting by region and brand includes the results of all 103 hotels in continuing operations. Details of each category are provided in the tables attached to this release.
-- Proforma RevPAR decreased 19.4% for hotels not under renovation on a 12%
decrease in ADR to $122.76 and a 626 basis point decline in occupancy
-- Proforma RevPAR decreased 19.8% for all hotels on a 12.1% decrease in
ADR to $122.25 and a 650 basis point decline in occupancy
HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS
For the 98 hotels as of September 30, 2009, that were not under renovation, Proforma Hotel EBITDA decreased 32.8% to $48.6 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) declined 437 basis points to 23.1%. For all 103 hotels included in continuing operations as of September 30, 2009, Proforma Hotel EBITDA decreased 34.2% to $49.8 million and Hotel EBITDA margin decreased 474 basis points to 22.4%.
Ashford believes year-over-year Hotel EBITDA and Hotel EBITDA margin comparisons are more meaningful to gauge the performance of the Company's hotels than sequential quarter-over-quarter comparisons. Given the substantial seasonality in the Company's portfolio and its active capital recycling, to help investors better understand this seasonality, the Company provides quarterly detail on its Proforma Hotel EBITDA and Proforma Hotel EBITDA margin for the current and certain prior-year periods based upon the number of core hotels in the portfolio as of the end of the current period. As Ashford's portfolio mix changes from time to time so will the seasonality for Proforma Hotel EBITDA and Proforma Hotel EBITDA margin. The details of the quarterly calculations for the previous four quarters for the current portfolio of 103 hotels included in continuing operations are provided in the tables attached to this release.
Monty J. Bennett, Chief Executive Officer, commented, "There have been recent signs of life in the broader lodging market, but the operating environment remains incredibly challenging. We continue to tightly manage our cost structure and work with the property management teams to offset the declining RevPAR trends as much as possible through aggressive asset management strategies. Preserving liquidity and eliminating near-term debt maturities are also at the top of our agenda, and we continue to have success in refinancing upcoming maturities, offsetting RevPAR declines with flooridor transactions and allocating capital to maximize long-term shareholder returns."
INVESTOR CONFERENCE CALL AND SIMULCAST
Ashford Hospitality Trust, Inc. will conduct a conference call on Thursday, November 5, 2009, at 12 p.m. ET. The number to call for this interactive teleconference is (212) 231-2900. A replay of the conference call will be available through November 12, 2009, by dialing (402) 977-9140 and entering the confirmation number, 21438862.
The Company will also provide an online simulcast and rebroadcast of its third quarter 2009 earnings release conference call. The live broadcast of Ashford's quarterly conference call will be available online at the Company's website at www.ahtreit.com on Thursday, November 5, 2009, beginning at 12 p.m. ET. The online replay will follow shortly after the call and continue for approximately one year.
Substantially all of our non-current assets consist of real estate investments and debt investments secured by real estate. Historical cost accounting for real estate assets implicitly assumes that the value of real estate assets diminishes predictably over time. Since real estate values instead have historically risen or fallen with market conditions, most industry investors consider supplemental measures of performance, which are not measures of operating performance under GAAP, to assist in evaluating a real estate company's operations. These supplemental measures include FFO, AFFO, EBITDA, Hotel Operating Profit, and CAD. FFO is computed in accordance with our interpretation of standards established by NAREIT, which may not be comparable to FFO reported by other REITs that do not define the term in accordance with the current NAREIT definition or that interpret the NAREIT definition differently than us. Neither FFO, AFFO, EBITDA, Hotel Operating Profit, nor CAD represents cash generated from operating activities as determined by GAAP and should not be considered as an alternative to a) GAAP net income (loss) as an indication of our financial performance or b) GAAP cash flows from operating activities as a measure of our liquidity, nor are such measures indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, management believes FFO, AFFO, EBITDA, Hotel Operating Profit, and CAD to be meaningful measures of a REIT's performance and should be considered along with, but not as an alternative to, net income and cash flow as a measure of our operating performance.
Ashford Hospitality Trust is a self-administered real estate investment trust focused on investing in the hospitality industry across all segments and at all levels of the capital structure, including direct hotel investments, second mortgages, mezzanine loans and sale-leaseback transactions. Additional information can be found on the Company's web site at www.ahtreit.com.
Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. When we use the words "will likely result," "may," "anticipate," "estimate," "should," "expect," "believe," "intend," or similar expressions, we intend to identify forward-looking statements. Such forward-looking statements include, but are not limited to, the timing for closing, the impact of the transaction on our business and future financial condition, our business and investment strategy, our understanding of our competition and current market trends and opportunities and projected capital expenditures. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford's control.
These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: general volatility of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy; and the degree and nature of our competition. These and other risk factors are more fully discussed in Ashford's filings with the Securities and Exchange Commission. EBITDA is defined as net income before interest, taxes, depreciation and amortization. EBITDA yield is defined as trailing twelve month EBITDA divided by the purchase price. A capitalization rate is determined by dividing the property's annual net operating income by the purchase price. Net operating income is the property's funds from operations minus a capital expense reserve of either 4% or 5% of gross revenues. Funds from operations ("FFO"), as defined by the White Paper on FFO approved by the Board of Governors of the National Association of Real Estate Investment Trusts ("NAREIT") in April 2002, represents net income (loss) computed in accordance with generally accepted accounting principles ("GAAP"), excluding gains (or losses) from sales or properties and extraordinary items as defined by GAAP, plus depreciation and amortization of real estate assets, and net of adjustments for the portion of these items related to unconsolidated entities and joint ventures.
The forward-looking statements included in this press release are only made as of the date of this press release. Investors should not place undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise.
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