SLIDE 1
Ja nua ry 2018
Company Presentation // January 2018
F
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war d L
- oking State me nts and Non- GAAP Me asur
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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 c o 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 o r de b t a mo unt. 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 o 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
- 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 o r in the a ppe ndix to this pre se nta tio n. T he c a lc ula tio n o f implie d e q uity va lue is de rive d fro m a n e stima te d b le nde d c a pita liza tio n ra te (“Ca p Ra te ”) fo r the e ntire po rtfo lio using the c a pita liza tio n ra te me tho d. T he e stima te d Ca p Ra te is b a se d o n re c e nt Ca p Ra te s o f pub lic a lly tra de d pe e rs invo lving a simila r b le nd o f a sse t type s fo und in the po rtfo lio , whic h is the n a pplie d to Ne t Ope ra ting I nc o me (“NOI ”) o f the c o mpa ny’ s a sse ts to c a lc ula te a T
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E nte rprise Va lue (“T E V”) o f the c o mpa ny. F ro m the T E V, we de duc t de b t a nd pre fe rre d e q uity a nd the n a dd b a c k wo rking c a pita l a nd the c o mpa ny’ s inve stme nt in Ashfo rd I nc . to de rive a n e q uity va lue . T he c a pita liza tio n ra te me tho d is o ne o f se ve ra l va lua tio n me tho ds fo r e stima ting a sse t va lue a nd implie d e q uity va lue . Amo ng the limita tio ns o f using the c a pita liza tio n ra te me tho d fo r de te rmining a n implie d e q uity va lue a re tha t it do e s no t ta ke into a c c o unt the po te ntia l c ha ng e o r va ria b ility in future c a sh flo ws, po te ntia l sig nific a nt future c a pita l e xpe nditure s, the inte nde d ho ld pe rio d o f the a sse t, o r a c ha ng e in the future risk pro file o f a n a sse t. 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 Prime , 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.