DALLAS—Ashford Hospitality Trust Inc. has reported financial results and performance measures for Q1, and has provided updates to its COVID-19 protocols. Subsequent to the end of the quarter, J. Robison Hays, III was appointed president/CEO of the company, effective May 14, 2020.
“Speaking to you for the first time as president/CEO, I could not be prouder of the performance of our team at this time,” Hays said in the company’s Q1 earnings call. “Although I’ve only been president and CEO for a number of days, I have been at Ashford for a number of years.”
Hays acknowledged that Ashford has conquered challenges before, and while each crisis is different, he believes the company has the right team and plan in place to tackle this one. “There are silver linings that come out of every crisis,” he said.
Financial and Operating Highlights
- Net loss attributable to common stockholders was $94.8 million or $0.94 per diluted share for the quarter.
- Comparable RevPAR for all hotels decreased 22.9% to $95.16 during the quarter.
- Adjusted EBITDA was $47.4 million for the quarter.
- Adjusted funds from operations (AFFO) was $(0.12) per diluted share for the quarter.
- During the quarter, the company refinanced its mortgage loan for the 226-room Le Pavillon Hotel in New Orleans.
- During the quarter, the company sold the Crowne Plaza Annapolis for $5.1 million in cash proceeds.
- CapEx invested during the quarter was $20.4 million.
As of March 31, 2020, the portfolio consisted of 116 hotels. Comparable RevPAR decreased 22.9% to $95.16 for all hotels on a 3.8% decrease in ADR and a 19.8% decrease in occupancy.
In response to the impact of COVID-19 on the hospitality industry, the company is deploying numerous strategies and protocols to protect the health and safety of its employees, guests, partners and communities where it operates.
“To address the unprecedented challenge of the COVID-19 pandemic, the company has taken immediate actions to enhance its operational and financial flexibility,” Hays said. “We have worked very closely with our property managers to minimize our operating costs. We remain steadfast in our approach to protect our hotels, safeguard the health of our associates and guests and establish a path to return our hotels to profitability.”
Additionally, the company has taken steps to ensure that it has additional financial flexibility going forward to navigate this crisis:
- Currently, the company has temporarily suspended operations at 23 properties. The company’s remaining 93 properties are operating at reduced levels.
- The company worked proactively with its property managers to aggressively cut operating costs at its hotels, ultimately resulting in an approximate 90% reduction in property-level staffing.
- The company has reduced its planned spend for capital expenditures for the year from a range of $125 million to $145 million to a range of $30 million to $50 million.
- The company has suspended its common dividend conserving approximately $7 million per calendar quarter.
- The company has taken actions to protect liquidity and reduce corporate expenses through compensation reductions and the curtailment of expenses resulting in an approximate 25% reduction in corporate G&A and reimbursable expenses and will continue to take all necessary additional actions to preserve capital and liquidity.
- The company estimates that its current monthly cash burn at its hotels given their current state of either having suspended operations or operating in a limited capacity is approximately $20 million per month. The company’s debt is all property-level, non-recourse debt and the monthly interest is currently approximately $13 million per month. The company’s run rate for corporate G&A and Advisory Fees is approximately $4 million per month.
- The company ended the quarter with cash and cash equivalents of $240 million and restricted cash of $127 million. The vast majority of the restricted cash is made up of lender and manager held reserves. The company is currently working with its property managers and lenders in order to utilize lender and manager held reserves to fund operating shortfalls. At the end of the quarter, there was also $19 million in due from third-party hotel managers, which is the company’s cash held by one of its property managers which is also available to fund hotel operating costs.
- Beginning on April 1, 2020, the company did not make principal or interest payments under nearly all of its loan agreements, which constituted an “Event of Default” as such term is defined under the applicable loan agreement. The company is actively working with its lenders to arrange mutually agreeable forbearance agreements to reduce its near-term cash burn rate and improve liquidity.
- Additionally, the company has partnered with local government agencies, medical staffing organizations and hotel brands to support COVID-19 response efforts. To date, through various initiatives, 48 Ashford Trust hotels have provided temporary lodging for first responders, healthcare professionals and other community residents impacted by the pandemic.