Yahoo Finance Ashford Hospitality Trust Inc (AHT) Q1 2024 Earnings Call Transcript Highlights: Strategic ...
Net Income: $67.4 million
Earnings Per Share (EPS): $0.6 per diluted share
Adjusted Funds From Operations (AFFO) Per Share: Negative $0.35
Adjusted EBITDA: $59.5 million
Total Debt: $2.9 billion with a blended average interest rate of 8.1%
Cash and Cash Equivalents: $113 million
Restricted Cash: $136 million
Net Working Capital: Approximately $183 million
Hotel Portfolio: 75 hotels with 18,021 rooms
Comparable Hotel Revenue Per Available Room (RevPAR): Decreased by 1%
Comparable Total Hotel Revenue Growth: Increased over the prior year quarter
Food and Beverage Revenue: Up 4% on a per occupied room basis
Other Revenue: Up 17% on a per occupied room basis
Business Transient Segment Revenue: Up 6% over the prior year quarter
Group Rooms Revenue: Full year pacing ahead by 7%
Capital Expenditures: Anticipated to be between $85 million and $105 million for 2024
Release Date: May 08, 2024
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
Positive Points
Ashford Hospitality Trust Inc has made significant progress in paying off its strategic corporate financing, reducing the debt by almost 50%.
The company successfully sold several assets, including a major sale of the Hilton Boston Back Bay for $171 million, which significantly contributed to debt reduction.
Ashford Hospitality Trust Inc has raised approximately $122 million through its non-traded preferred stock offering, enhancing its capital structure.
The company's diversified, high-quality hotel portfolio showed resilience with a revenue growth of approximately 3% in April, despite a soft March.
Ashford Hospitality Trust Inc is actively managing its asset portfolio, with ongoing renovations and conversions expected to boost future revenue and profitability.
Negative Points
The company reported an AFFO per diluted share of negative $0.35 for the first quarter, indicating potential challenges in operational efficiency.
Comparable hotel RevPAR for the portfolio decreased by 1% over the prior year quarter, reflecting some ongoing demand challenges.
Ashford Hospitality Trust Inc is not planning to reinstate a common dividend in 2024, which might be a concern for income-focused investors.
The company has a substantial amount of debt, with $2.9 billion in loans at a blended average interest rate of 8.1%, which could pose financial risks.
Some of the company's properties are undergoing significant renovations and conversions, which involve substantial capital expenditures and operational disruptions.
Q & A Highlights
Q: Can you discuss the improvement in the portfolio in April compared to March? A: J. Robison Hays, President and CEO, explained that March saw a decline in RevPAR by about 300 basis points, but April experienced a revenue increase of about 300 basis points. He attributed at least half of this shift to the holiday shift, but also noted that warmer weather across the portfolio and softer demand from the Northeast affected Q1 results. These factors are viewed as anomalies, not expected to continue into Q2.
Q: How are you balancing smaller asset sales with larger ones like the Boston Back Bay asset? A: J. Robison Hays, President and CEO, mentioned that the strategy involves reducing exposure in the limited service side and focusing more on full-service properties. Factors influencing sales decisions include loan maturities, strategic financing needs, and upcoming CapEx requirements. The goal is to generate significant proceeds while managing capital effectively across the portfolio.
Q: How has the preferred stock offering performed compared to your expectations, and what is the remaining capacity? A: Deric Eubanks, CFO, expressed satisfaction with the capital raising progress, noting a consistent inflow of about $8 million to $10 million per month. He anticipates this will increase as the company continues to deleverage and pay off strategic financing. The offering is set to run through May 2025, with potential for extension.
Q: Can you provide more details on the asset sales completed this quarter? A: J. Robison Hays, President and CEO, detailed that the sales included smaller deals achieving attractive cap rates and larger transactions like the Boston Back Bay asset. The strategy involves a mix of selling less strategic assets, managing upcoming CapEx, and focusing on full-service properties to align with long-term goals.
Q: What are the key drivers behind the decision to sell certain assets? A: J. Robison Hays, President and CEO, explained that decisions are based on several factors including loan maturities, strategic financing needs, and CapEx considerations. The aim is to optimize the portfolio by reducing exposure to limited service properties and focusing on full-service assets, balancing the need to generate proceeds with strategic long-term asset retention.
Q: How are you addressing the upcoming CapEx requirements for the assets? A: J. Robison Hays, President and CEO, noted that upcoming CapEx is a significant factor in deciding whether to retain or sell assets. For example, the Boston Back Bay asset, despite its high quality, required substantial CapEx for franchise agreement renewal, influencing the decision to sell and reallocate capital within the portfolio more effectively.
For the complete transcript of the earnings call, please refer to the full earnings call transcript.
This article first appeared on GuruFocus.
