Co mpa ny Pre se nta tio n April 2017 Sa fe Ha rb o r I n ke e - - PDF document

Co mpa ny Pre se nta tio n – April 2017

Sa fe Ha rb o r

2 I n ke e ping with the SE C's "Sa fe Ha rb o r" g uide line s, c e rta in sta te me nts ma de during this pre se nta tio n c o uld b e c o nside re d fo rwa rd-lo o king a nd sub je c t to c e rta in risks a nd unc e rta intie s tha t c o uld c a use re sults to diffe r ma te ria lly fro m tho se pro je c te d. Whe n we use the wo rds "will like ly re sult," "ma y," "a ntic ipa te ," "e stima te ," "sho uld," "e xpe c t," "b e lie ve ," "inte nd," o r simila r e xpre ssio ns, we inte nd to ide ntify fo rwa rd-lo o king sta te me nts. Suc h fo rwa rd-lo o king sta te me nts inc lude , b ut a re no t limite d to , o ur b usine ss a nd inve stme nt stra te g y, o ur unde rsta nding o f o ur c o mpe titio n, c urre nt ma rke t tre nds a nd o ppo rtunitie s, pro je c te d o pe ra ting re sults, a nd pro je c te d c a pita l e xpe nditure s. T he se fo rwa rd-lo o king sta te me nts a re sub je c t to kno wn a nd unkno wn risks a nd unc e rta intie s, whic h c o uld c a use a c tua l re sults to diffe r ma te ria lly fro m tho se a ntic ipa te d inc luding , witho ut limita tio n: g e ne ra l vo la tility o f the c a pita l ma rke ts a nd the ma rke t pric e o f o ur c o mmo n sto c k; c ha ng e s in o ur b usine ss o r inve stme nt stra te g y; a va ila b ility, te rms a nd de plo yme nt o f c a pita l; a va ila b ility o f q ua lifie d pe rso nne l; c ha ng e s in o ur industry a nd the ma rke t in whic h we o pe ra te , inte re st ra te s o r the g e ne ra l e c o no my, a nd the de g re e a nd na ture o f o ur c o mpe titio n. T he se a nd o the r risk fa c to rs a re mo re fully disc usse d in the Co mpa ny's filing s with the Se c uritie s a nd E xc ha ng e Co mmissio n. E BI T DA is de fine d a s ne t inc o me b e fo re inte re st, ta xe s, de pre c ia tio n a nd a mo rtiza tio n. E BI T DA yie ld is de fine d a s tra iling twe lve mo nth E BI T DA divide d b y the purc ha se pric e . A c a pita liza tio n ra te is de te rmine d b y dividing the pro pe rty's ne t o pe ra ting inc o me b y the purc ha se pric e . Ne t o pe ra ting inc o me is the pro pe rty's funds fro m

• pe ra tio ns minus a c a pita l e xpe nse re se rve o f e ithe r 4% o r 5% o f g ro ss re ve nue s. Ho te l E

BI T DA flo w-thro ug h is the c ha ng e in Ho te l E BI T DA divide d b y the c ha ng e in to ta l re ve nue s. E BI T DA, F F O, AF F O, CAD a nd o the r te rms a re no n-GAAP me a sure s, re c o nc ilia tio ns o f whic h ha ve b e e n pro vide d in prio r e a rning s re le a se s a nd filing s with the SE C. T his o ve rvie w is fo r info rma tio na l purpo se s o nly a nd is no t a n o ffe r to se ll, o r a so lic ita tio n o f a n o ffe r to b uy o r se ll, a ny se c uritie s o f Ashfo rd Ho spita lity T rust, I nc . o r a ny o f its re spe c tive a ffilia te s, a nd ma y no t b e re lie d upo n in c o nne c tio n with the purc ha se o r sa le o f a ny suc h se c urity.

Stra te g ic Ove rvie w

3

Oppor tunistic platfor m foc use d

• n uppe r
• upsc ale , full- se r

vic e hote ls Supe r ior long- te r m total shar e holde r r e tur n pe r for manc e T ar ge ts mode r ate de bt le ve ls of 55- 60% ne t de bt/ gr

• ss asse ts

Attr ac tive divide nd yie ld T ar ge ts c ash le ve l of 25- 35% of total e quity mar ke t c ap Highly- aligne d manage me nt te am & advisor y str uc tur e

Re c e nt De ve lo pme nts

4

• Q4 2016 E

a rning s Re le a se :

• Q4 Re vPAR g ro wth fo r a ll ho te ls no t unde r re no va tio n o f 3.2%
• Q4 Ho te l E

BI T DA ma rg in fo r a ll ho te ls no t unde r re no va tio n inc re a se d 46 b ps

• Q4 Ho te l E

BI T DA flo w-thro ug h fo r a ll ho te ls no t unde r re no va tio n o f 51%

• I

n F e b rua ry 2017, the Co mpa ny a nno unc e d a no n-b inding pro po sa l to a c q uire F e lCo r L

• dg ing T

rust I nc o rpo ra te d (NYSE : F CH) ("F e lCo r") fo r 1.192 sha re s o f Ashfo rd T rust a nd se c uritie s in Ashfo rd I nc . in e xc ha ng e fo r e a c h sha re o f F e lCo r

• I

n F e b rua ry 2017, the Co mpa ny a nno unc e d the a ppo intme nt o f Do ug la s A. K e ssle r a s Chie f E xe c utive Offic e r e ffe c tive imme dia te ly

• Anno unc e d e nha nc e me nts to c o rpo ra te g o ve rna nc e po lic ie s

117%

• 13%

12% 234% 105% 44% 95% 59% 25%

• 9%

21%

• 7%

202% 82% 191% 1,497% 296% 90% 120% 59% 29%

• 8%

33%

• 25%
• 100%

0% 100% 200% 300% 400% 500% 600% 700% 800% 900% I nc e ptio n 10-Yr 9-Yr 8-Yr 7-Yr 6-Yr 5-Yr 4-Yr 3-Yr 2-Yr 1-Yr YT D 2017 Pe e r Avg AHT

De mo nstra te d L

• ng -T

e rm T ra c k Re c o rd

5

(1) Sinc e I PO o n Aug ust 26, 2003 Pe e r ave rag e inc lude s: CHSP, CL DT , DRH, F CH, HST , HT , I NN, L HO, RL J, SHO *1-Yr thro ug h I nc e ptio n Re turns as o f 12/30/2016; YT D 2017 fro m 12/30/16 thro ug h 3/27/17 So urc e : SNL

T

• ta l Sha re holde r Re turn

L

• ng- te r

m pe r for manc e signific antly

• utpe r

for ms pe e r s

1

2,000%

19.4% 6.2% 5.7% 3.4% 3.3% 3.3% 2.5% 2.5% 1.9% 1.8% 1.3% 1.1% 0.8% 0.4% 0.3%

0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 16.0% 18.0% 20.0% AHT APL E HT RL J CL DT F CH CHSP RE IT Avg INN HST PE B DR H SHO L HO XHR

Hig he st I nside r Owne rship

6

RE I T ave rag e inc lude s: APL E , HT , RL J, CL DT , F CH, CHSP, I NN, HST , PE B, DRH, SHO, L HO, XHR RE I T So urc e : L ate st pro xy and o the r c o mpany filing s. (1) As o f 3/28/2017 (2) I nc lude s dire c t inte re sts, indire c t inte re sts, and inte re sts o f re late d partie s

Inside r Owne rship

Most highly aligne d manage me nt te am among the lodging RE IT se c tor

1,2

8.2% 6.9% 6.7% 6.6% 6.6% 6.4% 6.3% 6.1% 6.0% 5.9% 5.5% 5.4% 4.6% 4.6% 4.4% 3.6%

0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0% 9.0% AHT CHSP CL DT XHR PK APL E L HO HT AHP RL J RE IT Avg PE B DR H SHO HST INN

Attra c tive Divide nd Yie ld

7

RE I T ave rag e inc lude s: APL E , HT , RL J, CL DT , F CH, CHSP, I NN, HST , PE B, DRH, SHO, L HO, XHR So urc e : Co mpany filing s and marke t data (1) Co ve rag e ratio as o f De c e mb e r 31, 2016 (2) Annualize d b ase d o n mo st re c e nt divide nd anno unc e me nt

Divide nd Yie ld (a s of 3/ 22/ 17)

Highe st divide nd yie ld in the industr y and with attr ac tive c ove r age r atio of 3.1x1

2 2

8

Ashfo r d T r ust Ho te ls

Hig h Qua lity, Ge o g ra phic a lly Dive rse Po rtfo lio

L e Pavillon Hote l Ne w Or le ans, L A L ake way Re sor t & Spa Austin, T X Hilton Costa Me sa Co sta Me sa, CA Ma rriott F re mont F r e mo nt, CA L e Me ridie n Minne a polis Minne apo lis, MN Chic a g o Silve rsmith Chic ago , IL Hilton Bac k Bay Bo sto n, MA T he Churc hill Washingto n, D.C. W Atla nta Downtown Atlanta, GA Crowne Pla za Ke y We st Ke y We st, F L Ma rriott Sug a r L a nd Sugar L and, T X Hilton Sa nta F e Santa F e , NM Re na issa nc e Na shville Nashville , T N We stin Princ e ton Pr inc e to n, NJ Ma rriott Be ve rly Hills Be ve r ly Hills, CA E mba ssy Suite s Portla nd Po r tland, OR Ma rriott Ga te wa y Ar lingto n, VA

T

• p 25

74% T

• p 50

18% Othe r 8%

Po rtfo lio Ove rvie w

9

T T M Ho te l E BI T DA as o f De c e mb e r 31, 2016 fo r the 121 o wne d ho te ls as o f Marc h 22, 2017 Ho te l E BI T DA in tho usands

Hote l E BIT DA by Br and Hote l E BIT DA by Manage r Hote l E BIT DA by MSA Hote l E BIT DA by Chainsc ale

T

• p T

e n Mar ke ts

Mar r iott 57% Hilton 27% Hya tt 4% IHG 6% Inde pe nde nt 6% Mar r iott 32% Hilton 6% Hya tt 3% Re mington 58% Inte r state 1% Upsc ale 34% Uppe r

• Upsc ale

54% L uxur y 5% Uppe r

• Midsc ale

3% Inde pe nde nt 4%

T T M Hotel % of EBIT DA T

• tal

Wa shing to n DC Area $45,207 9.6% Sa n F ra n/ Oa kla nd , C A $34,559 7.3% L

• s Ang eles Metro Area

$33,163 7.0% Atla nta , GA $32,131 6.8% NY/ NJ Metro Area $29,905 6.3% DF W, T X $26,180 5.6% B

• sto n, MA

$25,665 5.4% Na shville, T N $25,527 5.4% MN/ St. Pa ul Area $16,975 3.6% Mia m i Metro Area $11,920 2.5%

T

• ta l Portfolio

$471,216 100.0%

52% 58% 59% 43% 41% 42% 58% 22% 53% 60% 59% 68% 70% 47% 57% 53%

• 200%
• 175%
• 150%
• 125%
• 100%
• 75%
• 50%
• 25%

0% 25% 50% 75% 100% 2008 2009 2010 2011 2012 2013 2014 2015 2016 Non- Re mington Re mington

Re ming to n Outpe rfo rma nc e - Pro fita b ility

• Re mington has outpe r

for me d in E BIT DA flow- thr

• ugh 7 out of the

last 9 ye ars

10

NOT E : Re ming to n manag e d ho te ls o wne d b y Ashfo rd T rust and Ashfo rd Prime as c o mpare d to No n-Re ming to n manag e d ho te ls

Hote l E BIT DA F low- T hr

• ugh
• Supe rior ma na g e me nt of downside risk a nd c a sh flow loss
• 800%
• 808%

334%

300%

E mbassy Suite s Por tland: Se c ure d a ne w, hig h q ua lity re sta ura nt te na nt, upg ra ding T

V a nd Wi-F i to impro ve g ue st e xpe rie nc e

Ritz Ca rlton Atla nta : Co mple te d re sta ura nt re no va tio n, e xte nsive g ue stro o m re no va tio n sc he dule d fo r Q4

($21M), e xpa nding Ritz Ca rlto n Club L

• ung e , e xpa nde d/ upda te d g ift sho p into upsc a le re ta il ma rke t

Mar r iott Be ve r ly Hills: 55% 2016 Re vPAR g ro wth (first full ye a r sinc e $28M c o nve rsio n fro m Cro wne Pla za ) Hyatt Re ge nc y Savannah: Co mple te d e xte nsive ro o m re no va tio n with sho we r c o nve rsio ns a nd I

nc re a se d pre mium ro o ms inve nto ry b y 70 ro o ms to drive ADR

Mar r iott Br idge wate r : Co nve rte d 30 king ro o ms to do ub le / do ub le ro o ms to c a pture mo re g ro up b usine ss;

inc re a se pre mium ro o m type b y 43.5% to c a pture hig he r ADR. Re c e ntly c o mple te d a lo b b y a nd re sta ura nt re no va tio n

W Hote l Atlanta Downtown: T

e rmina te d e xisting BL T Ste a k o utle t ma na g e me nt a g re e me nt a nd b ro ug ht the o pe ra tio n in-ho use with a pro je c te d a nnua l po sitive GOP impa c t o f a lmo st $300k

Cour tyar d De nve r Air por t: Se c ure d two sig nific a nt pie c e s o f a irline c re w b usine ss tha t will drive sig nific a nt

sha re g ro wth in 2017

W & L e Me r idie n Minne apolis: Wo rke d with e xisting re sta ura nt te na nt a t L

M to e xte nd le a se unde r mo re fa vo ra b le te rms. L e a se d unde rutilize d lo b b y spa c e a t W MPL S to Ma nny’ s fo r a Priva te Dining Ro o m 11

Asse t Ma na g e me nt I nitia tive s - Re c e nt

Re naissanc e Nashville : Pa rtne ring with de ve lo pe r to re de ve lo p Na shville Co nve ntio n Ce nte r re sulting in ne w,

pre mium me e ting spa c e , e xte nding me e ting spa c e le a se fro m 11 ye a rs to 99 ye a rs with no upfro nt o r o ng o ing le a se pa yme nts

Ma rriott Crysta l Ga te wa y: Spe nding $30M o n ma jo r re no va tio ns: a ll g ue stro o ms, lo b b y & re sta ura nt, a dditio n o f

M Club , ne w a nd e xpa nde d fitne ss c e nte r, a dding 6 ke ys a nd a dditio na l me e ting spa c e

Hilton Boston Bac k Bay: Shifte d re ve nue stra te g ie s to inc re a se o ff-se a so n o c c upa nc y to a dd sig nific a nt

inc re me nta l re ve nue , spe nding $11.3M in 2017 o n g ue stro o m a nd lo b b y re no va tio n

Hya tt Re g e nc y Sa va nna h: E

xte nsive fo o d a nd b e ve ra g e o utle t re po sitio ning a nd full lo b b y re no va tio n ne a rly c o mple te . Ne w Me e ting spa c e c re a te d a s we ll. Ope ning ne w re ta il ma rke t

Mar r iott Dallas DF W: Co nve rting fro m b ra nd to fra nc hise ma na g e d (Re ming to n) o n Ma y 24th. Co mpre he nsive

b a llro o m a nd me e ting spa c e re no va tio n in summe r 2017

E mbassy Suite s Santa Clar a: Spe nding $10.4M o n 2017 g ue stro o ms a nd lo b b y re no va tio n to inc lude la rg e r

ma rke t a nd fitne ss a re a

E ng a g e d e xpe nse c onsulta nt: Cha rg e d with e xa mining a ll c o ntra c te d se rvic e s in se le c t ho te ls a nd ne g o tia ting

impro ve d te rms to drive pro fit a t e xisting o pe ra tio ns

E xplor ing Outdoor Adve r tising: Wo rking with se ve ra l c o nsulta nts to e xplo re o utdo o r a dve rtising (Wa ll wra ps,

vide o b o a rds, a nd fre e -sta nding ) to mo ne tize unde rutilize d o utdo o r spa c e

T ime / Motion studie s: E

ng a g e d a c o nsulta nt to a na lyze c urre nt wo rk ha b its in se ve ra l ho te ls a nd pro po se la b o r sa ving s initia tive s 12

Asse t Ma na g e me nt I nitia tive s - Upc o ming

13

Va lue Cre a tio n T hro ug h Ac tive Asse t Ma na g e me nt

55.8% 52.0% 40.5% 47.4%

0.0% 10.0% 20.0% 30.0% 40.0% 50.0% 60.0% 2016 3-Yr Avg

AHT Pe e r Avg

Por tfolio Hote l E BIT DA F low- T hr

• ugh

*Pe e rs inc lude DRH, HST , I NN, L HO, CHSP, HT , SHO, RL J, F CH No te : Pro fo rma Ho te l E BI T DA flo w-thro ug h info rmatio n no t availab le fo r CL DT *

• Ashfor

d manage me nt c r e ate s value in both br and and non- br and manage d asse ts

• Hote l E

BIT DA flow- thr

• ugh has
• utpe r

for me d the pe e r ave r age for the last thr e e ye ar s

• Por

tfolio has pr

• duc e d Re vPAR gains

r e lative to our c ompe titor s for thr e e c onse c utive ye ar s

W Atlanta Downtown W Minne apolis F

• shay

L e Me r idie n Minne apolis

F Y2016 E BIT DA F low-T hru: 157% F ir st full ye ar

• f o wne r

ship F Y2016 E BIT DA F low-T hru: 115% F ir st full ye ar

• f o wne r

ship F Y2016 E BIT DA F low-T hru: 84% F ir st full ye ar

• f o wne r

ship

Ca se Study – Co nve rsio n to Re ming to n Ma na g e d

14

Imple me nte d Str ate gie s:

• I

nc re a se d c lub ro o m pre mium pric ing fro m $30 to $45

• I

nc re a se d c o rpo ra te g ro up ro o m nig hts to 25% mid-we e k to e nsure se ll-o uts a nd push ra te

• I

mpro ve d pa tte rn ma na g e me nt a nd b usine ss mix to inc re a se hig he r ra te d re ta il c o ntrib utio n

• Mo ve d to pre mium pric ing , a llo wing re stric tio n
• f pre mium ro o ms a nd pre fe rre d b usine ss

ma na g e me nt

• Ag g re ssive ly pric e d pre fe rre d ro o ms ra te s 25%-

30% YOY

Marriott Fremont – Fremont, CA

*$ in T ho usands (1) As o f De c e mb e r 31, 2016

• Announc e d forwa rd c a p ra te a nd E

BIT DA multiple of 8.1% and 10.0x, r e spe c tive ly

• Ac tua l c a p ra te a nd E

BIT DA multiple of 10.9% and 7.9x, re spe c tive ly

• Curre nt c ap rate and E

BIT DA multiple of 15.6% and 5.7x, r e spe c tive ly (1)

• Ac quir

e d for $50 million in Aug 2014; Oc t 2016 r e fi had alloc ate d loan amount of $61 million

T T M Pr e - T ake ove r T T M Post- T ake ove r Inc r e ase (% , BPs)

T

• ta l Re ve nue *

$19,140 $22,153

15.7%

Re vPAR $107.1 $130.5

21.8%

GOP ma rg in 27.0% 38.1%

+1,116

E BI T DA ma rg in 20.9% 30.0%

+916

Mar r iott F r e mont

Ca se Study – Ma rrio tt Be ve rly Hills Co nve rsio n

15

16

Ca se Study – Ma rrio tt Be ve rly Hills Co nve rsio n (c o nt.)

• T

he Ma rrio tt Be ve rly Hills o ffic ia lly o pe ne d o n July 1, 2015 a nd the re no va tio n c o nc lude d in Aug ust

• T

rust inve ste d $21mm, ne t o f ke y mo ne y fro m Ma rrio tt*

• Prio r to the c o nve rsio n, the ho te l ha d June 2015 T

T M NOI

• f $5.6mm
• F

Y2016 NOI

• f $10.3mm
• Re c e ive d a n a wa rd fro m Ma rrio tt I

nte rna tio na l fo r re no va tio n e xc e lle nc e

• F

Y2016 pe r for manc e (fir st full ye ar sinc e c onve r sion):

• T
• tal r

e ve nue gr

• wth of 52%
• Room r

ate gr

• wth of 31%
• Hote l E

BIT DA flow- thr

• ugh of 53%
• A gain of 3,760 bps in marke t share ve rsus the trac t sc ale

* No t all o f this c apital was inc re me ntal. Ho te l was in ne e d o f a re no vatio n. “Re fre sh” c apital re q uire me nts pe r Cro wne standards we re e stimate d to b e $8mm.

17

Ca se Study – Ma rrio tt Be ve rly Hills Co nve rsio n (c o nt.)

L

• bby Bar

Re staur ant F r

• nt De sk

L

• bby

18

Ca se Study – Ma rrio tt Be ve rly Hills Co nve rsio n (c o nt.)

Gue str

• om

Boar dr

• om

Gue str

• om

Club L

• unge

Ag g re ssive Asse t Ma na g e me nt – W Atla nta Do wnto wn

19

• Ac q uire d in July 2015
• 237 ke ys, 9,000 sq . ft. o f me e ting

spa c e

• L
• c a te d in the he a rt o f Do wnto wn

Atla nta

• Clo se pro ximity to the do wnto wn a nd

midto wn de ma nd g e ne ra to rs: Ce nte nnia l Olympic Pa rk, the Atla nta Aq ua rium, a nd Ge o rg ia Do me

• Re pla c e d unpro fita b le re sta ura nt

ma na g e r a nd re -po sitio ne d re sta ura nt

• Ne w ma na g e me nt o f the o n-pre mise

dig ita l b illb o a rd

• Re ne g o tia te d va le t pa rking a g re e me nt
• E

limina te d o pe ra tio na l lo ss a t Bliss Spa thro ug h re struc turing

• F

ull ye ar 2016 (fir st full ye ar

• f
• wne r

ship) E BIT DA flow- thr u of 157% , and E BIT DA gr

• wth of 27%

W Atlanta – Atlanta, GA W Atlanta – Atlanta, GA

Hote l Ove rvie w: Inve stme nt Highlights

Ca pita l Struc ture a nd Ne t Wo rking Ca pita l

• Appro pria te use o f le ve ra g e to mo re c o st e ffe c tive ly inve st in the ho te l c yc le
• Curre nt ne t wo rking c a pita l o f a ppro xima te ly $4.65 pe r sha re
• All de b t is no n-re c o urse , pro pe rty le ve l mo rtg a g e de b t
• T

a rg e te d c a sh b a la nc e o f 25% to 30% o f ma rke t c a pita liza tio n

• He dg e unfa vo ra b le e c o no mic sho c ks

20

(1) As o f De c e mb e r 31, 2016 (2) Adjuste d fo r sale o f the Re naissanc e Po rtsmo uth and E mb assy Suite s Syrac use (3) At marke t value as o f Marc h 22, 2017

E nte r pr ise Value (1) Ne t Wor king Capital (1)

F ig ure s in m illio ns e xc e pt pe r share value s Sto c k Pric e (As o f Ma rc h 22, 2017) $5.85 F ully Diluted Sha res Outsta nding 115.1

Equity Va lue $673.5

Plus: Preferred E q uity 553.1 Plus: Deb t

(2)

3,735.9

T

• ta l Ma rket Ca pita liza tion

$4,962.5

L ess: Net Wo rking C a p ita l (535.4)

T

• ta l Enterprise Va lue

$4,427.2

C a sh & C a sh E q uiva lents $348.0 Restric ted C a sh 144.2 I nvestm ent in Sec urities F und 104.1 Ac c o unts Rec eiva b le, net 44.9 Prepa id E xpenses 17.9 Due F ro m Affilia tes, net (17.3) Due fro m T hird Pa rty Ho tel Ma na g ers 10.6 Ma rket Va lue o f Ashfo rd, I nc . I nvestm ent (3) 35.9

T

• ta l Current Assets

$688.4

Ac c o unts Pa ya b le, net & Ac c rued E xp enses $128.2 Dividends Pa ya b le 24.8

T

• ta l Current L

ia bilities $153.0 Net Working Ca pita l $535.4

De b t Ma turitie s a nd L e ve ra g e

• T

a rg e t Ne t De b t/ Gro ss Asse ts o f 50-60%

• Ma inta in mix o f fixe d a nd flo a ting ra te de b t (Curre ntly 85% flo a ting & 15% fixe d)
• L

a dde r ma turitie s

• E

xc lusive use o f pro pe rty-le ve l, no n-re c o urse de b t

21

As o f De c e mb e r 31, 2016 (1) Assume s e xte nsio n o ptio ns are e xe rc ise d (2) Adjuste d fo r sale o f the Re naissanc e Po rtsmo uth and E mb assy Suite s Syrac use No te : All de b t yie ld statistic s are b ase d o n E BI T DA to princ ipal.

De bt Matur ity Sc he dule (mm)(1) (2)

De bt Yie ld: 14.2% De bt Yie ld: 12.6% De bt Yie ld: 21.9% De bt Yie ld: 14.1% De bt Yie ld: 11.3% De bt Yie ld: 11.1%

$15.7 $201.2 $5.4 $96.9 $257.1 $533.9 $710.7 $1,467.0 $450.0 $0.0 $200.0 $400.0 $600.0 $800.0 $1,000.0 $1,200.0 $1,400.0 $1,600.0 2017 2018 2019 2020 2021 T he r e afte r F ixe d- Rate F loating-Rate

Co rpo ra te Go ve rna nc e E nha nc e me nts

22

• Modific ation of the Company’s E

quity Inc e ntive Plan:

• Re quir

e s stoc k owne r ship by dir e c tor s and offic e r s

• Re quir

e s minimum ve sting pe r iods on stoc k options and stoc k appr e c iation r ights issue d

• Modific ation of the Company’s By- L

aws: Re duc e s the thr e shold fr

• m

35% to 30% of outstanding shar e s to c all a spe c ial me e ting of shar e holde r s

• Modific ation of the Company’s Stoc k Owne r

ship Guide line s: Inc r e ase s the r e quir e d shar e owne r ship for dir e c tor ’s fr

• m 3x the

dir e c tor ’s annual boar d r e taine r fe e to 4x

• Inve stor

F e e dbac k: Shar e d with Boar d at quar te r ly boar d me e tings

• Se par

ation of Chair man and CE O r

• le s: E

ffe c tive F e br uar y 2017

Bo a rd o f Dire c to rs Dive rsity Ma trix

Profe ssiona l E xpe rie nc e Ge og ra phy Inde pe nde nc e

Re a l E sta te / Ho spita lity C-Suite E xe c utive E ntre pre ne urship L e g a l So uthwe st We st Co a st No rthe a st So uthe a st I nde pe nde nt Mo nty J. Be nne tt

   

Be nja min J. Anse ll, M.D.

   

F re d K le isne r

   

Amish Gupta

    

K a ma l Ja fa rnia

   

Philip S. Pa yne

    

Ala n L . T a llis

   

23

Bo a rd o f Dire c to rs Dive rsity Ma trix (c o nt.)

Ag e E thnic ity

25-40 41-55 56-70 White / Ca uc a sia n Middle E a ste rn / So uth Asia Mo nty J. Be nne tt

 

Be nja min J. Anse ll, M.D.

 

F re d K le isne r

 

Amish Gupta

 

K a ma l Ja fa rnia

 

Philip S. Pa yne

 

Ala n L . T a llis

 

24

K e y T a ke a wa ys

25

• F
• c use d on inc r

e asing shar e holde r value thr

• ugh

simplifying str ate gy and impr

• ving por

tfolio quality

• Str
• ng manage me nt te am with a long tr

ac k r e c or d of c r e ating shar e holde r value

• Highe st divide nd yie ld in the industr

y

• Highly- aligne d platfor

m thr

• ugh manage me nt str

uc tur e and high inside r

• wne r

ship

Co mpa ny Pre se nta tio n – April 2017