Investor Presentation Investor Presentation May 2007 May 2007 - - PowerPoint PPT Presentation
Investor Presentation Investor Presentation May 2007 May 2007 Ashford Advantages Ashford Advantages Proactive, disciplined approach Proactive, disciplined approach Best in class, diversified portfolio Best in class, diversified
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Proactive, disciplined approach
Best in class, diversified portfolio
Outperforms REIT peers
High dividend yield with strong coverage
Active capital recycler
Commitment to internal growth initiatives
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7.4% 7.4% % Insider Ownership % Insider Ownership (4)
(4)
78% 78% % Top 25 MSA % Top 25 MSA (3)
(3)
61% 61% % Upper Upscale & Luxury % Upper Upscale & Luxury (3)
(3)
82% 82% % Hilton & Marriott % Hilton & Marriott (3)
(3)
92% 92% % Top 50 MSA % Top 50 MSA (3)
(3)
57% 57% Net Debt / TEV Net Debt / TEV (4)
(4)
$4.5B $4.5B Total Enterprise Value Total Enterprise Value (1)
(1)
7.0% 7.0% Dividend Yield % Dividend Yield % (1)
(1)
$98.08 $98.08 RevPAR RevPAR (2)
(2)
126 126 # of Hotels # of Hotels 27,902 27,902 # of Rooms # of Rooms $135.91 $135.91 ADR ADR (2)
(2)
AHT AHT
(1) (1) Assumes 5/8/07 share price of $12.02. Assumes 5/8/07 share price of $12.02. (2) (2) All hotels included in continuing operations for the 1Q All hotels included in continuing operations for the 1Q ’ ’07. 07. (3) (3) Represents 2006 EBITDA proforma for CNL transaction. Represents 2006 EBITDA proforma for CNL transaction. (4) (4) Proforma for April equity raise. Proforma for April equity raise.
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PRIMARY STRATEGY: PRIMARY STRATEGY: Direct Hotel Ownership Direct Hotel Ownership (98% of Gross Assets) (98% of Gross Assets)
Expansion Expansion Early Decline Early Decline Late Decline Late Decline Recovery Recovery
SECONDARY STRATEGIES: SECONDARY STRATEGIES: Mezzanine Lending Mezzanine Lending 1 1st
st Mortgages
Mortgages Sale Leasebacks Sale Leasebacks (2% of Gross Assets) (2% of Gross Assets)
Primary strategy is direct hotel investments, supplemented by secondary strategies throughout cycles to enhance returns by secondary strategies throughout cycles to enhance returns
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0.0% 1.0% 2.0% 3.0% 4.0% 5.0% '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07E 2,000 4,000 6,000 8,000 10,000 12,000 14,000 16,000 Acquisitions Dispositions & Listed Assets % U.S. Supply Change % U.S. Supply - Historical Avg.
% Change U.S. Hotel Rooms % Change U.S. Hotel Rooms Ashford IPO Ashford IPO CHR Acquisition CHR Acquisition
Proven market cycle judgment and investment discipline
Source: Company estimates & Smith Travel Research. Source: Company estimates & Smith Travel Research.
# of Rooms # of Rooms
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Portfolio Management and Internal Growth Strategies – – Optimize risk Optimize risk-
adjusted returns via portfolio mix – – Enhance top and bottom line performance Enhance top and bottom line performance
Value Creation Value Creation Capital Appreciation Capital Appreciation Dividend Growth Dividend Growth Investment Allocation Investment Allocation Efficient Capital Structure Efficient Capital Structure Risk/Reward Balance Risk/Reward Balance RevPAR Growth RevPAR Growth Market Penetration Market Penetration Margin Improvement Margin Improvement Higher Quality Assets Higher Quality Assets Guest Satisfaction/Loyalty Guest Satisfaction/Loyalty
Portfolio Management Portfolio Management Internal Growth Internal Growth
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RevPAR growth outperformed REIT peer average 11 consecutive quarters consecutive quarters
1.3% 2.2% 6.0% 6.7% 8.9% 12.5% 12.6% 12.3% 12.7% 12.1% 10.3% 11.1% 12.0% 9.5% 8.2% 8.4% 10.4% 11.9% 6.9% 6.6% 8.5% 10.3% 2.0% 4.5% 7.8% 9.7% 8.7% 9.1%
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0% 4Q 03 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07 AHT RevPAR Growth Hotel REITs RevPAR Growth
Note: Hotel REITs include: BEE, DRH, EHP, ENN, FCH, HIH, HPT, HS Note: Hotel REITs include: BEE, DRH, EHP, ENN, FCH, HIH, HPT, HST, HT, KPA, LHO, SHO & WXH. AHT RevPAR T, HT, KPA, LHO, SHO & WXH. AHT RevPAR growth numbers are for those hotels not under renovation. Compa growth numbers are for those hotels not under renovation. Comparable numbers used for peers when available. rable numbers used for peers when available.
RevPAR Growth % RevPAR Growth %
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$0 $50 $100 $150 $200 $250 $300 2004 2005 2006 2007-2008E
Maintenance Capital Expenditures Maintenance Capital Expenditures Value Value-
Added Capital Expenditures
239 bps of RevPAR 239 bps of RevPAR Penetration in 2005 Penetration in 2005 240 bps of RevPAR 240 bps of RevPAR Penetration in 2006 Penetration in 2006
Focus on value-
added capex grows RevPAR and captures market share through higher RevPAR penetration market share through higher RevPAR penetration
$2.8 $2.8 $30.6 $30.6 $11.4 $11.4 $38.4 $38.4 $9.6 $9.6 $7.7 $7.7 $224.0 $224.0 $56.0 $56.0
Capex ($ millions) Capex ($ millions)
Source: Company estimates. Source: Company estimates.
CHR CHR AHT AHT CHR CHR AHT AHT
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There are numerous value-
add asset management
Capital Hilton Capital Hilton Washington DC Washington DC
Opportunities Opportunities Rebrand / Reposition Rebrand / Reposition Room / Public Area Refresh Room / Public Area Refresh Restaurant reconcepts Restaurant reconcepts Residential components Residential components Expand meeting space Expand meeting space Lease space Lease space Retail conversions Retail conversions Excess land Excess land Additional rooms Additional rooms Spa additions Spa additions
Hilton El Conquistador Hilton El Conquistador Tucson, AZ Tucson, AZ Hilton Lincoln Centre Hilton Lincoln Centre Dallas, TX Dallas, TX Hilton Orange County Hilton Orange County Costa Mesa, CA Costa Mesa, CA Embassy Suites Embassy Suites Portland, OR Portland, OR Marriott Seattle Waterfront Marriott Seattle Waterfront Seattle, WA Seattle, WA JW Marriott JW Marriott San Francisco, CA San Francisco, CA Renaissance Tampa Renaissance Tampa Tampa, FL Tampa, FL Marriott Legacy Marriott Legacy Plano, TX Plano, TX Hilton Santa Fe Hilton Santa Fe Santa Fe, NM Santa Fe, NM Crowne Plaza Crowne Plaza Key West, FL Key West, FL Hyatt Dulles Hyatt Dulles Herndon, VA Herndon, VA
CHR Portfolio CHR Portfolio AHT Portfolio AHT Portfolio
Radisson Radisson Indianapolis, IN Indianapolis, IN Sea Turtle Inn Sea Turtle Inn Jacksonville, FL Jacksonville, FL
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Dividend Growth: 250% since 1Q 2004
Strong Dividend CAD Coverage: – – 1Q 2007 1Q 2007 – – 1.33x 1.33x – – Full Year 2006 Full Year 2006 – – 1.24x 1.24x
Attractive dividend yield of 7.0%
(1) (1)
$0.00 $0.05 $0.10 $0.15 $0.20 $0.25 1Q 04 2Q 04 3Q 04 4Q 04 1Q 05 2Q 05 3Q 05 4Q 05 1Q 06 2Q 06 3Q 06 4Q 06 1Q 07
Dividend ($)
0.0% 1.0% 2.0% 3.0% 4.0% 5.0% 6.0% 7.0% 8.0%
Dividend Yield %
Dividend Dividend Yield Dividend Yield - Peer Avg.
(1) (1) Assumes 5/8/07 stock price of $12.02. Assumes 5/8/07 stock price of $12.02. Note: Peers include BEE, DRH, EHP, ENN, FCH, HIH, HPT, HST, HT, Note: Peers include BEE, DRH, EHP, ENN, FCH, HIH, HPT, HST, HT, KPA, LHO, SHO & WXH. KPA, LHO, SHO & WXH.
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Capital recycling of assets out of portfolio purchases enhances value and delivers higher returns enhances value and delivers higher returns
$170 million sales price of Phase I assets is nearly 25% higher than book value higher than book value
FGS Portfolio (9) FGS Portfolio (9) Best Western (1) Best Western (1) Gull Wing Suites (1) Gull Wing Suites (1) Holiday Inn (1) Holiday Inn (1) Howard Johnson (2) Howard Johnson (2) Inn on the Square (1) Inn on the Square (1) Ramada Inn (2) Ramada Inn (2) Radisson (1) Radisson (1) ’ ’05 CNL Portfolio (15) 05 CNL Portfolio (15) Residence Inn (8) Residence Inn (8) TownePlace Suites (7) TownePlace Suites (7) Office Buildings (3) Office Buildings (3) Fort Worth, TX Fort Worth, TX
Bucks County, PA Bucks County, PA MIP Portfolio (2) MIP Portfolio (2) Marriott (1) Marriott (1) Sheraton (1) Sheraton (1) Full Service Portfolio (2) Full Service Portfolio (2) Embassy Suites (1) Embassy Suites (1) Doubletree Suites (1) Doubletree Suites (1) Contributed Assets (1) Contributed Assets (1) Radisson (1) Radisson (1) Dunn Portfolio (3) Dunn Portfolio (3) Fairfield Inn (2) Fairfield Inn (2) Hampton Inn (1) Hampton Inn (1)
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Transformational transaction – – $2.4 billion acquisition of high $2.4 billion acquisition of high-
quality, well-
located assets – – Creative approach to a rare opportunity Creative approach to a rare opportunity
Substantially increases company’ ’s growth prospects s growth prospects – – 3 3rd
rd largest lodging REIT
largest lodging REIT – – High RevPAR growth potential High RevPAR growth potential
Enhances cyclical sustainability – – Increases ownership of Hilton & Marriott brands Increases ownership of Hilton & Marriott brands – – Concentration in high quality, upper Concentration in high quality, upper-
upscale hotels
9.0% 9.0% FTM EBITDA Yield FTM EBITDA Yield $125,000 $125,000 Price per Key Price per Key – – Select Service Select Service $215,000 $215,000 Price per Key Price per Key – – Full Service Full Service $177,000 $177,000 Price per Key Price per Key -
Total 11.1x 11.1x FTM EBITDA Multiple FTM EBITDA Multiple 7.6% 7.6% FTM NOI Cap Rate FTM NOI Cap Rate CHR Deal Metrics CHR Deal Metrics
* Based on 2006 property EBITDA & MSA rankings according to 2000 * Based on 2006 property EBITDA & MSA rankings according to 2000 US Census. Top 25 includes Montreal, Canada. US Census. Top 25 includes Montreal, Canada.
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$ 182,000 $ 182,000 MeriStar Hospitality MeriStar Hospitality February 2006 February 2006 $ 320,000 $ 320,000 Crescent 6 Crescent 6-
Hotel Portfolio April 2007 April 2007 April 2007 April 2007 April 2007 April 2007 January 2007 January 2007 April 2007 April 2007 April 2007 April 2007
$ 125,000 $ 125,000 Winston Hotels Winston Hotels Innkeepers USA Innkeepers USA CNL 51 CNL 51-
Hotel Portfolio Eagle Hospitality Eagle Hospitality Highland Hospitality Highland Hospitality Target Target $ 190,000 $ 190,000 $ 155,000 $ 155,000 $ 177,000 $ 177,000 $ 225,000 $ 225,000 $ / Key $ / Key Transaction Metrics Transaction Metrics – – $ Price Per Key $ Price Per Key
1) Assumes 5/8/07 stock price of $12.02 and mezzanine platform 1) Assumes 5/8/07 stock price of $12.02 and mezzanine platform valuation at book value. valuation at book value. Source: Real Capital Analytics, Morgan Keegan research and inte Source: Real Capital Analytics, Morgan Keegan research and internal estimates. rnal estimates.
$ 160,000 $ 160,000 Current AHT Value per Key Current AHT Value per Key (1)
(1)
The attractiveness of the relative values per key are highlighted when compared with recent hotel portfolio highlighted when compared with recent hotel portfolio deals: deals:
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Marriott (68) Marriott (68) 7 7 2 2 1 1 20 20 16 16 12 12 2 2 8 8 Hilton (39) Hilton (39) 14 14 14 14 3 3 6 6 Hyatt (5) Hyatt (5) 5 5
CHR Hotels Existing Assets
Starwood (7) Starwood (7) Other (7) Other (7) 6 6 1 1 1 1 1 1
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51% 31% 8% 1% 6% 2%1% Marriott Hilton Hyatt Starwood Radisson IHG Other
37% 25% 10% 6% 1% 9% 11% 1%
Pacific
Mid Atlantic Mountain
Canada
45% 18% 21% 1% 2% 8% 3% 2%
Marriott Remington Hilton Hyatt Starwood Interstate Hotel Equities Dunn
1% 60% 35% 4% Luxury Upper-Upscale Upscale Midscale w/o F&B
Chain Scale Chain Scale Brand Brand Geography Geography Manager Manager
Note: Proforma based on 2006 EBITDA. Note: Proforma based on 2006 EBITDA.
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Ashford’ ’s experienced management team is pursuing s experienced management team is pursuing
and financial savings as opposed to a simple buy and and financial savings as opposed to a simple buy and hold strategy hold strategy
Completed Strategies Completed Strategies Improved debt terms Improved debt terms Marriott restructuring Marriott restructuring Hyatt Dearborn JV buyout Hyatt Dearborn JV buyout Current Strategies Current Strategies $135 million of capex $135 million of capex Hilton JV refinancing Hilton JV refinancing Economies of scale Economies of scale Low G&A add Low G&A add Brand leverage Brand leverage Potential Strategies Potential Strategies $400 million of asset sales $400 million of asset sales Joint ventures Joint ventures Potential repositionings Potential repositionings ROI projects ROI projects
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Goal to achieve a leverage ratio of sub 60% within 12 months
Commitment to delever delever the company through the company through: : – – Selective asset sales Selective asset sales
Phase I sales of $170 million (16 hotels & 2 office buildings) expected to mostly close by end of Q2 buildings) expected to mostly close by end of Q2
Potential Phase II sales of approximately $400 million – – Strategic joint ventures Strategic joint ventures
$370 million joint venture discussion – – Capital market strategies Capital market strategies – – Internal cash flow growth Internal cash flow growth
Note: Equity raise and market cap assumes 5/8/07 price of $12.0 Note: Equity raise and market cap assumes 5/8/07 price of $12.02 per share. 2 per share.
49% 49% 53% 53% 57% 57% Net Debt / TEV Net Debt / TEV $1.7 $1.7 $1.7 $1.7 $1.7 $1.7 Market Cap Market Cap $1.9 $1.9 $2.2 $2.2 $2.6 $2.6 Net Debt Net Debt $3.8 $3.8 $4.1 $4.1 $4.5 $4.5 Enterprise Value Enterprise Value $370M $370M JV JV $400M $400M
Current Current
Potential Strategies Potential Strategies
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$0 $100 $200 $300 $400 $500 $600 $700 $800 $900 $1,000 '07 '08 '09 '10 '11 '12 '13 '14 '15 '16 '17 '18 '19 '20 '21 '22 '23 Fixed Debt Floating Debt
Ashford’ ’s debt is not only priced very attractively with a s debt is not only priced very attractively with a weighted average cost of debt of 6.0%, but also has a weighted average cost of debt of 6.0%, but also has a diversified maturity schedule diversified maturity schedule
Debt Maturities ($ millions) Debt Maturities ($ millions) $57 $57 $126 $126 $153 $153 $320 $320 $391 $391 $111 $111 $293 $293 $396 $396 $946 $946 $35 $35 $7 $7
Source: Company estimates. Source: Company estimates.
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4.3% 5.5% 3.4% 3.5% 3.9% 3.2% 12.4% 6.8% 9.8% 7.3% 8.0% 7.8%
8.0x 10.0x 12.0x 14.0x 16.0x 18.0x 20.0x Office Apartment Retail Industrial Healthcare Lodging
2008 FFO Multiple
0.0% 2.0% 4.0% 6.0% 8.0% 10.0% 12.0% 14.0%
Dividend Yield / FFO Growth %
2008 FFO Multiple Dividend Yield 2008 FFO Growth %
Source: FBR Property Week Source: FBR Property Week – – 5/8/07. 5/8/07.
Lodging REITs lag other multiples despite having one of the highest dividend yields and the highest projected the highest dividend yields and the highest projected 2008 FFO growth 2008 FFO growth
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0.0% 2.0% 4.0% 6.0% 8.0% 10.0%
'89 '90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07E '08E '09E
Supply RevPAR
There is still a very favorable spread between new room supply and RevPAR growth supply and RevPAR growth
Source: Smith Travel Research & Pricewaterhouse Coopers. Source: Smith Travel Research & Pricewaterhouse Coopers.
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Supply growth is still well below historical averages
1) Percentage of 2006 EBITDA proforma for CNL transaction. 1) Percentage of 2006 EBITDA proforma for CNL transaction. Source: Lodging Econometrics, Smith Travel Research, Pricewater Source: Lodging Econometrics, Smith Travel Research, PricewaterhouseCoopers & Merrill Lynch research. houseCoopers & Merrill Lynch research. Note: Historical numbers represent monthly average since 1988. Note: Historical numbers represent monthly average since 1988.
Upscale Upscale Upper Upscale Upper Upscale Top 25 Markets Top 25 Markets Total US Total US Market Market 78% 78%
1.7% 99% 99% 2.1% 2.1% 1.6% 1.6% 35% 35% 7.2% 7.2% 3.6% 3.6% 60% 60% 2.5% 2.5% 1.6% 1.6% % AHT EBITDA % AHT EBITDA(1)
(1)
’ ’07 Growth 07 Growth 2007 US Supply Growth 2007 US Supply Growth
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Though the lodging industry has had strong results for the last couple of years, hotels the last couple of years, hotels’ ’ net operating incomes are net operating incomes are still well below the peak levels of 2000 in real terms still well below the peak levels of 2000 in real terms
Source: PKF Hospitality Research. Source: PKF Hospitality Research. Note: NOI is before capital reserve, debt service, rent, income Note: NOI is before capital reserve, debt service, rent, income taxes, depreciation & amortization. taxes, depreciation & amortization.
$15,785 $15,398 $13,949 $12,480 $11,479 $13,456 $15,147 $19,477 $18,248 $18,001 $16,721
$10,000 $12,000 $14,000 $16,000 $18,000 $20,000 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07E $ NOI per Available Room 2 3 % G r
t h N e e d e d t
q u a l 2 3 % G r
t h N e e d e d t
q u a l 2006 Constant Dollars 2006 Constant Dollars
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25% 50% 75% 100% 125% 150% 175%
'90 '91 '92 '93 '94 '95 '96 '97 '98 '99 '00 '01 '02 '03 '04 '05 '06 '07E
Price per Key / Construction Cost Index (1990=100%) 0.00% 0.50% 1.00% 1.50% 2.00% 2.50% 3.00% 3.50% 4.00% 4.50% Change in Supply (%) Change in Supply Price per Key Index Construction Cost Index
High construction costs and strong inflows of hotel capital support further value appreciation capital support further value appreciation
Source: Smith Travel Research, Pricewaterhouse Coopers, Bureau Source: Smith Travel Research, Pricewaterhouse Coopers, Bureau of Labor & Statistics & HVS International.
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Proactive, disciplined approach
Best in class, diversified portfolio
Outperforms REIT peers
High dividend yield with strong coverage
Active capital recycler
Commitment to internal growth initiatives
Strong industry fundamentals