Ashford Hospitality Trust Reports Fourth Quarter Results
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Ashford Hospitality Trust Reports Fourth Quarter Results
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Category: Worldwide - Industry economy
- Figures / Studies
This is a press release selected by our editorial committee and published online for free on 2009-02-26
Ashford Hospitality Trust, Inc. (NYSE: AHT) today reported the following results and performance measures for the fourth quarter ended December 31, 2008. 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 December 31, 2008. Unless otherwise stated, all reported results compare the fourth quarter ended December 31, 2008, with the fourth quarter ended December 31, 2007. The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.
FINANCIAL HIGHLIGHTS AND LIQUIDITY
-- Corporate unrestricted available cash at the end of the quarter was $242 million
-- Total revenue decreased 4.9% to $295.1 million from $310.4 million
-- Net income available to common shareholders was $135.1 million, or $1.35 per diluted share, compared with a net loss of $9.9 million, or $0.08 loss per diluted share, in the prior-year quarter
-- Adjusted funds from operations (AFFO) per diluted share increased 20.0% to $0.36 per diluted share
-- AFFO per diluted share for the year was $1.31 as compared to a previous estimate of $1.29 - $1.33
-- Cash available for distribution (CAD) per diluted share increased 21.7% to $0.28 per diluted share
-- CAD per diluted share for the year was $1.02 as compared to a previous estimate of $1.00 - $1.04
-- Fixed charge ratios were 1.72x and 1.77x under the senior credit facility covenants and the Series B convertible preferred covenants, relatively unchanged from the previous quarter's results of 1.72x and 1.75x, versus required minimums of 1.25x each
PORTFOLIO HIGHLIGHTS
-- Proforma RevPAR was down 7.4% for hotels not under renovation on a 2.0% decrease in ADR to $138.84 and a 388-basis point decline in occupancy
-- Proforma RevPAR was down 8.8% for all hotels on a 2.3% decrease in ADR to $138.10 and a 459-basis point decline in occupancy
-- Proforma Hotel Operating Profit for hotels not under renovation declined by 8.7%
-- Proforma Hotel Operating Profit margin for hotels not under renovation declined by 110 basis points
CAPITAL ALLOCATION
-- 2008 asset sales reach $437 million on a 6.6% trailing 12-month NOI cap rate and 12.0x trailing 12-month EBITDA multiple
-- Repurchased 23.4 million common shares in the quarter for a total of $51.0 million, and repurchased 1.7 million shares of Series A and Series D preferred stock combined for a total of $9.9 million
-- Capex invested in the quarter totaled $24.6 million
-- Capex for 2009 above and beyond reserve amounts equals $37.8 million
NOTE RECEIVABLE IMPAIRMENT
At December 31, 2008 a loss reserve was established for a note receivable held by our unconsolidated joint venture in which we have a 25% interest. A loan is impaired when, based on current information and events, it is probable that we will be unable to collect all amounts recorded as assets on the balance sheet according to the contractual terms of the loan agreement. Our assessment of impairment was based on considerable judgment and estimates. Based on our assessment a reserve was established for $5.5 million, the full amount of the loan.
CAPITAL STRUCTURE
On February 20, 2009, the company closed on the refinancing of the Gateway Marriott hotel in Washington D.C. for an amount of $60.8 million. The three year loan bears interest at a rate of 400 over LIBOR and has two one year extension options. The loan was used to retire a $47.0 million loan that was secured by the same asset.
At December 31, 2008, the Company's net debt to total gross assets (defined by the corporate credit facility) was 57%. As of December 31, 2008, the Company had $2.8 billion of debt with a blended average interest rate of 3.35%. Including its $1.8 billion interest rate swap, 95% of the Company's debt is variable-rate debt. The Company's weighted average debt maturity including extension options is 6.0 years.
PORTFOLIO REVPAR
As of December 31, 2008, the Company had a portfolio of direct hotel investments consisting of 103 properties classified in continuing operations. During the fourth quarter, 96 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 (96 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 7.4% for hotels not under renovation on a 2.0% decrease in ADR to $138.84 and a 388-basis point decline in occupancy
-- Proforma RevPAR decreased 8.8% for all hotels on a 2.3% decrease in ADR to $138.10 and a 459-basis point decline in occupancy
HOTEL EBITDA MARGINS AND QUARTERLY SEASONALITY TRENDS
For the 96 hotels as of December 31, 2008 that were not under renovation, Proforma Hotel EBITDA decreased 8.7% to $74.2 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) declined 110 basis points to 26.8%. For all 103 hotels included in continuing operations as of December 31, 2008, Proforma Hotel EBITDA decreased 13.0% to $75.1 million and Hotel EBITDA margin decreased 185 basis points to 25.7%.
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, "Our strong year-over-year growth in AFFO and CAD per share confirm our investment, asset management and capital markets strategies are offsetting some of the significant headwinds our industry faces. The diversity of our high quality branded portfolio across price segment and region provides some cushion against localized economic downturn and new supply. Our asset management efforts have mitigated the decline in operating margin. The capital market strategies to improve financial covenants, reduce interest expense and extend loan maturities enhance our sustainability. Going forward, we will remain proactive addressing weakening lodging industry fundamentals. Visibility will remain challenging in 2009, but we have a solid liquidity position and will continue to aggressively manage all areas of our business."
INVESTOR CONFERENCE CALL AND SIMULCAST
Ashford Hospitality Trust, Inc. will conduct a conference call on Thursday, February 26, 2009, at 1:00 p.m. ET. The number to call for this interactive teleconference is (303) 262-2175. A replay of the conference call will be available through March 5, 2009, by dialing (303) 590-3000 and entering the confirmation number, 11124956#.
The Company will also provide an online simulcast and rebroadcast of its fourth quarter 2008 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, February 26, 2009, beginning at 1:00 p.m. ET. The online replay will follow shortly after the call and continue for approximately one year. A direct link to the live broadcast can be found at: http://www.videonewswire.com/event.asp?id=54809.
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.
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