No ve mb e r 2017 F o rwa rd L o o king Sta te me nts a nd No - - PowerPoint PPT Presentation

No ve mb e r 2017

F

• rwa rd L
• o king Sta te me nts a nd No n-GAAP Me a sure s

2

In 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

• 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

• 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 BIT 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 BIT DA yie ld is de fine d a s tra iling twe lve mo nth E BIT 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 BIT DA flo w-thro ug h is the c ha ng e in Ho te l E BIT DA divide d b y the c ha ng e in to ta l re ve nue s. E BIT 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 o r in the a ppe ndix to this pre se nta tio n. 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, Inc . 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.

Ma na g e me nt T e a m

3

• 33 ye a rs o f re a l e sta te &

ho spita lity e xpe rie nc e

• 15 ye a rs with Ashfo rd
• 10 ye a rs with Go ldma n Sa c hs
• Sta nfo rd BA, MBA

DOUGL

AS A. KE SSL E R

Chie f E xe c utive Offic e r & Pre side nt

• 17 ye a rs o f ho spita lity e xpe rie nc e
• 14 ye a rs with Ashfo rd
• 3 ye a rs with Club Co rp
• CF

A c ha rte rho lde r

• So uthe rn Me tho dist Unive rsity BBA

DE

RIC S. E UBANKS, CF

A

Chie f F inanc ial Offic e r

• 32 ye a rs o f ho spita lity e xpe rie nc e
• 14 ye a rs with Ashfo rd (18 ye a rs

with Ashfo rd pre de c e sso r)

• Pe ppe rdine Unive rsity BS,

Unive rsity o f Ho usto n MS, CPA MARK L . NUNNE

L E Y

Chie f Ac c o unting Offic e r

• 32 ye a rs o f ho spita lity & le g a l

e xpe rie nc e

• 14 ye a rs with Ashfo rd (11 ye a rs

with Ashfo rd pre de c e sso r)

• Unive rsity o f No rth T

e xa s BS, Unive rsity o f Ho usto n JD DAVID A. BROOKS

Chie f Ope rating Offic e r, Ge ne ral Co unse l

• 12 ye a rs o f ho spita lity e xpe rie nc e
• 7 ye a rs with Ashfo rd (5 ye a rs with

Ashfo rd pre de c e sso r)

• 5 ye a rs with Ste phe ns Inve stme nt

Ba nk

• Okla ho ma Sta te Unive rsity BS

JE

RE MY J. WE L T E R

E VP o f Asse t Manag e me nt

• 12 ye a rs o f ho spita lity e xpe rie nc e
• 12 ye a rs with Ashfo rd
• 3 ye a rs o f M&A e xpe rie nc e a t

Dre sse r Inc . & Me rrill L ync h

• Princ e to n Unive rsity AB
• J. R

OBISON HAYS

Chie f Strate g y Offic e r

Upsc ale 33% Uppe r

• Upsc ale

55% L uxur y 5% Uppe r

• Midsc ale

3% Inde p. 4% Mar r iott 31% Hilton 6% Hyatt 3% Re mington 59% Inte r state <1% T

• p 25

73% T

• p 50

19% Othe r 8%

Po rtfo lio Ove rvie w

4

(1) As o f Se pte mb e r 30, 2017 (2) T T M a s o f Se pte mb e r 30, 2017 fo r the 120 o wne d ho te ls a s o f No ve mb e r 7, 2017 (3) Ho te l E BIT DA in tho usa nds

120

Hote ls

25,000

Rooms

$5.7B

Gr

• ss Asse ts(1)

31

State s T

OP T E N ME T RO ARE AS(2),(3)

PORT

F OL IO BY HOT E L

E BIT DA(2)

Br and Pr

• pe r

ty Manage r Chainsc ale

$122

Re vPAR

(2)

Mar r iott 58% Hilton 28% Hyatt 4% IHG 4% Inde p. 6%

MSA

T T M Hotel % of EBIT DA T

• tal

Wa shing to n DC $45,405 9.8% Sa n F ra n/ Oa kla nd , C A $34,729 7.5% L

• s Ang eles, C A

$33,971 7.3% New Yo rk/ New Jersey $30,237 6.5% Na shville, T N $26,734 5.8% B

• sto n, MA

$26,477 5.7% Atla nta , GA $25,410 5.5% DF W, T X $25,123 5.4% Minn./ St. Pa ul, MN $15,678 3.4% Austin, T X $12,979 2.8%

T

• ta l Portfolio

$463,933 100.0%

5

<1%

Ge o g ra phic a lly Dive rse

Washington D.C. – 9.8% L

• s Ange le s – 7.3%

San F r anc isc o – 7.5% Ne w Yor k – 6.5% Boston – 5.7% Nashville – 5.8% Atlanta – 5.5% Dallas / F

• t. Wor

th – 5.4% Minne apolis – 3.4% T ampa – 2.5% Houston – 2.5% Miami – 2.4% Or lando – 2.2% San Die go – 1.6% Philade lphia – 1.7% Por tland – 2.1% Ke y We st – 1.4% Indianapolis – 1.5% Jac ksonville – 2.3% Austin – 2.8% L as Ve gas – 1.8% Phoe nix – 1.4% Savannah – 2.4%

No te : Pe rc e nt o f to ta l po rtfo lio Ho te l E BIT DA sho wn fo r the T T M pe rio d a s o f Se pte mb e r 30, 2017 fo r the 120 o wne d ho te ls a s o f No ve mb e r 7, 2017

Hig h Qua lity

6

Cro wne Pla za L a Co nc ha Ke y We st, F L W Atla nta Do wnto wn Atlanta, GA Ma rrio tt Be ve rly HIlls Be ve rly Hills, CA L e Pa villo n Ne w Orle ans, L A One Oc e a n Jac kso nville , F L L e Me ridie n Minne a po lis Minne apo lis, MN W Minne a po lis Minne apo lis, MN T he Silve rsmith Chic ag o , I L Hya tt Co ra l Ga b le s Co ral Gab le s, F L T he Churc hill Washing to n D.C. Re na issa nc e Na shville Nashville , T N Hya tt Sa va nna h Savannah, GA

Ove rvie w

7

Opportunistic pla tform foc use d on uppe r upsc a le , full- se rvic e hote ls Hig he st inside r owne rship Disc ipline d c a pita l ma na g e me nt Alig ne d a dvisory struc ture T a rg e ts de bt le ve ls of 55- 60% ne t de bt/ g ross a sse ts Attra c tive divide nd yie ld T a rg e ts c a sh le ve l of 25- 30%

• f tota l e quity ma rke t c a p

Supe rior long - te rm tota l sha re holde r re turn

F ull-Se rvic e Ra tio na le

8

170 BPS

AT

T RACT IVE SUPPL Y F UNDAME NT AL S 1.4% 2.0% 3.1% 3.5% 0.0% 0.5% 1.0% 1.5% 2.0% 2.5% 3.0% 3.5% 4.0% 10-YR 2018E Uppe r-Upsc a le Othe r Cha insc a le s

L OWE R

150 BPS

L OWE R

F

AVORABL E ACQUISIT ION YIE L DS

6.5%

L

• w E

nd

8.5%

Hig h E nd

Manag e me nt E stimate s

VAL

UE- ADD O PPORT UNIT IE S

39%

F r a nc hise d Uppe r Upsc a le Rooms a s a % o f

T

• ta l Uppe r Upsc a le Cha in Sc a le

Se g me nt(1)

(1) E stima te b a se d upo n MAR, HL T , H, a nd IHG b ra nde d ro o ms (2) Othe r c ha in sc a le s inc lude luxury, upsc a le , a nd uppe r midsc a le So urc e : PWC, ST R, Blo o mb e rg & Co mpa ny F iling s

W Atla nta Downtown Atlanta, GA

$218 $170 $305 $574 $72 $90 $147 $89 $112 $18 $97 $81 $45 $52 $68 $65 $400 $76 $112 $17 $275 $95 $200 $10 $11 $73 $116 $90

$0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Millio ns Co mmo n Ra ise s Co mmo n Buyb a c ks Pre fe rre d Ra ise s Pre fe rre d Buyb a c ks / Re de mptio ns

Disc ipline d Ca pita l Ma na g e me nt

9

T ra c k re c o rd o f inc r

e asing shar e holde r r e tur ns b y c a pita lizing upo n

c yc lic a l c ha ng e s a nd a dva nta g e o us pric ing situa tio ns

COMMON SHARE BUYBACKS

F ina nc ia l Crisis

73.6M 50% $3.28

Sha r e s

Of Outsta nding Sha re s Ave ra g e Buyba c k

R

E CE NT

PRE

F E RRE D E QUIT Y ACT IVIT Y

9.0% 

Old Coupon

~$2M in total annual inc r e me ntal c ash savings

7.4%

2016 2017

Ne w Coupon

8.5% 

Old Coupon

7.5%

Ne w Coupon

(1) (1) T hro ug h Oc to b e r 2017

42.4% 56.1% 49.2% 56.4% 55.5% 59.6% 55.7% 58.7% 58.5% 59.1% 58.3% 64.9% 61.2% 60.9% 20.0% 25.0% 30.0% 35.0% 40.0% 45.0% 50.0% 55.0% 60.0% 65.0% 70.0% $0 $1,000 $2,000 $3,000 $4,000 $5,000 $6,000 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 Q3 17 Millio ns Gro ss Asse ts Ne t De b t Ne t De b t / Gro ss Asse ts

L e ve ra g e T a rg e t

10

Appro pria te use o f le ve ra g e c o ntrib ute d to o utsize d lo ng -te rm to ta l sha re ho lde r re turns re la tive to pe e rs No n-re c o urse , pro pe rty le ve l mo rtg a g e de b t L e ve ra g e po lic y c o nsiste nt sinc e I PO

(1) (1) (1) Ba se d o n pub lic filing s; a djuste d fo r unc o nso lida te d Hig hla nd JV fro m 2011 – 2014 No te : Gro ss Asse ts a nd Ne t De b t a djuste d fo r c a sh & c a sh e q uiva le nts a nd o the r liq uid c a sh-like ite ms a s re po rte d

9% 10% 9% 28% 75% 28% 22% 25% 25% 25% 28% 40% 48%

0% 10% 20% 30% 40% 50% 60% 70% 80% $0 $200 $400 $600 $800 $1,000 $1,200 $1,400 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 Millio ns Avg Ca sh Avg E q uity Ma rke t Ca p Ca sh / E q uity Ma rke t Ca p

Ca sh T a rg e t

11

(1) YT D Se pte mb e r 2017 (2) Ba se d o n pub lic filing s; a djuste d fo r unc o nso lida te d Hig hla nd JV fro m 2011 - 2014 (3) Pe r Blo o mb e rg

F

INANCIAL

C RISIS C URRE

NT

C YCL

E

F

INANCIAL

C R

ISIS

Po sitio ne d to b uy b a c k a ppro xima te ly 50% o f

• utsta nding c o mmo n sha re s fo r a b o ut $240

millio n le a ding to o utsize d to ta l sha re ho lde r re turns

C UR

R E NT

C YCL

E

Ample fle xib ility to e xe c ute o ppo rtunistic g ro wth a nd ma inta in he dg e a g a inst a n e c o no mic do wnturn

(2) (3) (1)

19.1% 15.8% 7.6% 6.1% 3.6% 3.3% 2.5% 2.3% 2.0% 1.7% 1.6% 1.1% 0.8% 0.5% 0.4% 0.3% 0.00% 2.00% 4.00% 6.00% 8.00% 10.00% 12.00% 14.00% 16.00% 18.00% 20.00% AHT AHP HT APL E CL DT RE I T Avg CHSP RL J PE B I NN HST DRH SHO XHR L HO PK

Hig he st I nside r Owne rship

12

RE IT a ve ra g e inc lude s: AHP, HT , APL E , CL DT , CHSP, RL J, PE B, INN, HST , DRH, SHO, XHR, L HO, PK RE IT So urc e : L a te st pro xy a nd o the r c o mpa ny filing s. (1) As o f 11/ 7/ 2017 (2) Inc lude s dire c t inte re sts a nd inte re sts o f re la te d pa rtie s

Most highly aligne d manage me nt te am a mo ng the

lo dg ing RE I T se c to r

#1

$139M

T

• tal Dollar

Value o f I

nside r Owne rship (1)

Adviso ry Ag re e me nt Struc ture

13

(1) Ame nde d Adviso ry Ag re e me nt in June 2015

ADVISOR MANAGE

D RE

IT

F e e s Pr

• vide a sse t ma na g e me nt,

a dvisor y se r vic e s & ke y mone y

SUMMARY T

E RMS(1)

BASE F

E E

INCE

NT IVE F E E

INCE

NT IVE F E E

PAYME

NT

O T

HE R F E E S

T

E RM

E

XT E NSIONS

• 70 b ps o f T
• ta l Ma rke t Ca pita liza tio n (T

MC)

• Pa ya b le q ua rte rly
• 5% o f the T

SR o utpe rfo rma nc e (vs d e fine d pe e r se t) time s E q uity Ma rke t Ca pita liza tio n

• Sub je c t to 25% o utpe rfo rma nc e ma ximum
• De te rmine d a nnua lly
• Pa id o ve r 3 ye a rs in e q ua l a nnua l insta llme nts
• Up to 50% c a n b e pa id in sto c k a t RE

I T s e le c tio n

• Re imb urse me nt fo r inte rna l a ud it a nd o the r
• ve rhe a d c o sts
• Initia l te rm o f 10 ye a rs
• Initia l te rm e nd d a te June 9, 2025
• Auto ma tic 5 ye a r e xte nsio ns

KE

Y MONE Y

• F

ro m time -to -time Ad viso r ma y c o ntrib ute ke y mo ne y to he lp fund a c q uisitio ns

F a c ilita te Sha r e holde r Alig nme nt

7.7% 7.2% 6.4% 6.3% 6.3% 6.1% 5.9% 5.8% 5.7% 5.6% 5.2% 4.4% 4.4% 4.2% 4.2% 4.0% 3.5% 4.0% 4.5% 5.0% 5.5% 6.0% 6.5% 7.0% 7.5% 8.0% AHT AHP HT L HO APL E RL J PK CL DT CHSP RE I T Avg XHR DRH I NN PE B SHO HST

Attra c tive Divide nd Yie ld

14

So urc e : Co mpa ny filing s a nd ma rke t da ta (1) As o f 11/ 7/ 2017 (2) Annua lize d b a se d o n mo st re c e nt divide nd a nno unc e me nt (3) Inc lude s: AHP, APL E , CL DT , PK, L HO, CHSP, HT , RL J, XHR, DRH, PE B, HST , INN, SHO 2 2 3

Highe st divide nd yie ld in the industry(1)

152%

• 5%

22% 208% 98% 47% 86% 56% 27%

• 8%

22% 3% 202% 82% 191% 1,497% 296% 90% 120% 59% 29%

• 8%

33%

• 16%
• 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

Supe rio r T

• ta l Sha re ho lde r Re turns

15

(1) Sinc e I PO o n Aug ust 26, 2003 (2) As o f 12/ 30/ 2016 (3) F ro m 12/ 30/ 16 thro ug h 11/ 7/ 17 (4) I nc lud e s: CHSP, CL DT , DRH, HST , HT , I NN, L HO, RL J, SHO *I nc lud e s d ivid e nd re inve stme nt a s re p o rte d a nd tra c ke d b y SNL

L

ONG- T E R M T

SR SIGNIF

ICANT L Y OUT PE R F OR MS PE E R S

2,000%

De mo nstra te d lo ng -te rm tra c k re c o rd o f total

share holde r re turn outpe rformanc e *

L

ONG- T E RM O UT PE RF ORMANCE

4,990 BPS

Sinc e IPO

8,770 BPS

10-Yr

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

16

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

T F OL IO HOT E L

E BIT DA F

L OW- T HR OUGH

*Pe e rs inc lude DRH, HS T , I NN, L HO, CHS P, HT , S HO, 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 AT

L ANT A DOWNT OWN

W MINNE

APOL IS F OSHAY

L

E ME R IDIE N MINNE APOL IS

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

• f o wne r

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

• f o wne r

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

• f o wne r

ship

52% 58% 59% 42% 46% 47% 63% 30% 22% 53% 60% 59% 68% 70% 47% 56% 44% 28%

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

0% 25% 50% 75% 100% 2008 2009 2010 2011 2012 2013 2014 2015 2016 YT D Q3 2017 No n-Re ming to n Re ming to n

Co mpe titive Adva nta g e – Affilia te d Ma na g e r

17

• Affiliate d pr
• pe r

ty manage r be ne fits - Re mington outpe r for me d in E BIT DA flow- thr

• ugh 7 out of the last 10 ye ar

s

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

Hote l E BIT DA F low- T hr

• ugh
• Supe r

ior manage me nt of downside r isk and c ash flow loss

• 800%
• 808%

334%

300%

Va lua tio n Oppo rtunity

18

(1) Ba se d o n a ve ra g e fro m 2014 to YT D June 2017 (2) Pe e r s inc lude : RL J, DRH, HST , SHO, L HO, CL DT , HT , INN, CHSP

PRICE / 2018E AF F O / SHARE MUL

T IPL E

T T M C AP R

AT E

T E V / 2018E E BIT DA MUL

T IPL E

Disc ount to

a ve ra g e pe e r tra d ing c a p ra te (b ps)

VAL

UAT ION O PPORT UNIT Y

172

Disc ount to

a ve ra g e pe e r tra d ing AF F O multiple

7x

Disc ount to

a ve ra g e pe e r tra d ing E BIT DA multiple

2x

Oppo rtunity to c a pture sig nific a nt

va lua tion upside re la tive to pe e rs

Re vPAR Growth(1) Hote l E BIT DA F low- T hrough(1) Hote l E BIT DA Growth(1) Hote l E BIT DA Margin Growth(1)

O UT

PE RF ORMANCE

10-YR T SR

ASHF

ORD T RUST

PE

E RS(2)

5.3% 3.8% 52% 37% 7.0% 5.3% 81 BPS 35 BPS 82% (5% )

(3) As o f No ve mb e r 7, 2017 (4) Ba se d o n c o nse nsus e stima te s

8.8% 8.1% 7.6% 7.6% 7.1% 7.0% 6.9% 6.7% 6.7% 6.6% 6.5% 6.0% 6.5% 7.0% 7.5% 8.0% 8.5% 9.0% 10.7x 11.2x 12.0x 12.6x 12.7x 12.8x 13.0x 13.0x 13.1x 13.3x 14.1x 10.0x 10.5x 11.0x 11.5x 12.0x 12.5x 13.0x 13.5x 14.0x 14.5x 4.3x 7.7x 8.5x 10.5x 10.9x 10.9x 11.2x 11.7x 11.9x 12.2x 13.3x 4.0x 5.0x 6.0x 7.0x 8.0x 9.0x 10.0x 11.0x 12.0x 13.0x 14.0x

Ca se Study – Ag g re ssive Asse t Ma na g e me nt

19

• Ac q uire d the W Atla nta Do wnto wn in

July 2015

• 237 ke ys, 9,000 sq . ft. o f me e ting

spa c e

• 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 Me rc e de s Be nz Sta dium

• 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 (first full ye ar of

• wne rship) E

BIT DA flow-thru of 157% , and E BIT DA growth of 27%

W Atlanta – Atlanta, GA

Hote l Ove rvie w Imple me nte d Stra te g ie s

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

20

• Ac q uire d the Ma rrio tt F

re mo nt in Aug ust 2014

• 357 ke ys, 15,000 sq . ft. o f me e ting spa c e
• Ide a lly lo c a te d o ff Inte rsta te 880 a t the

g a te wa y to Silic o n Va lle y. Ho me to o ve r 1,200 te c hno lo g y c o mpa nie s.

• Anno unc e d fo rwa rd c a p ra te a nd E

BIT DA multiple o f 8.1% a nd 10.0x, re spe c tive ly

• Cur

r e nt c a p r a te a nd E BIT DA multiple of 15.7% a nd 5.7x, r e spe c tive ly (1)

• Ac quir

e d for $50 million a nd Oc t 2016 r e fi ha d a lloc a te d loa n a mount of $61 million

• Inc re a se d c lub ro o m pre mium pric ing
• Inc 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

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

25%-30% YOY

• F

rom T T M Pre -T ake ove r to T T M Post- T ake ove r

• Re ve nue inc re ase d 15.7%
• Re vPAR inc re ase d 21.8%
• GOP margin inc re ase d 1,116 bps
• E

BIT DA margin inc re ase d 916 bps Marrio iott F t Fremont – Frem emont, CA CA

Hote l Ove rvie w Imple me nte d Stra te g ie s

(1) As o f S e pte mb e r 30, 2017

Asse t Ma na g e me nt I nitia tive s – Re c e ntly Co mple te d

21

Hyatt Re ge nc y Savannah: Co mple te d g ue stro o m re no va tio n with sho we r c o nve rsio ns a nd inc re a se d

pre mium ro o ms inve nto ry b y 70 ro o ms. Also inc lude d F &B o utle t re po sitio ning , me e ting spa c e a nd lo b b y.

Marriott Bridge 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. Imple me nte d pa id pa rking .

W Hote l Atlanta Downtown: T

e rmina te d e xisting re sta ura nt ma na g e me nt a g re e me nt a nd b ro ug ht the

• 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 $300,000. E

ng a g ing a pre mie re re sta ura nt c o nsulta nt fo r re -c o nc e pting o f the spa c e .

Marriott Dallas DF W: Co nve rte d 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 due to b e c o mple te d. Also a c q uire d the re g io na l la undry o pe ra tio n.

Re side nc e Inn Orlando L BV: Co mple te d re sta ura nt, lo b b y, a nd me e ting spa c e re no va tio n. W Hote l Minne apolis: L

e a se d unde rutilize d lo b b y spa c e to Ma nny’ s Ste a kho use fo r a priva te dining ro o m.

L e Me ridie n Minne apolis: Wo rke d with e xisting re sta ura nt te na nt to re struc ture a nd e xte nd the le a se unde r

mo re fa vo ra b le te rms. F itne ss c e nte r e xpa nsio n c o mple te d. Gue stro o m re no va tio n to c o mme nc e in Q4.

Hyatt Re ge nc y Coral Gable s: Co mple te d re sta ura nt, lo b b y, me e ting spa c e a nd pa ntry re no va tio n.

Gue stro o m re no va tio n pla nne d fo r 2018.

Courtyard Basking Ridge and Re side nc e Inn Sorre nto Me sa: Imple me nte d pa id pa rking .

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

22

Re naissanc e Nashville : Pa rtne ring with de ve lo pe r o n the a dja c e nt $430 millio n F

ifth & Bro a dwa y mixe d use de ve lo pme nt whic h will pro vide ho te l with upg ra de d me e ting spa c e a nd e ve ntua l fe e o wne rship. E xte nsive lo b b y upg ra de to b e c o mple te d.

Marriott Crystal Gate way: Ma jo r re no va tio ns: a ll g ue stro o ms (c o mple te d Oc t 2017), lo b b y & re sta ura nt, a dditio n

• 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 ($30 millio n).

Ritz Carlton Atlanta: E

xte nsive g ue stro o m re no va tio n sc he dule d fo r Q4 a nd e xpa nsio n o f Ritz Ca rlto n Club L

• ung e .($21 millio n).

She raton Anc horage : Gue stro o m a nd lo b b y re no va tio n to c o mme nc e in No ve mb e r 2017 ($6.4 millio n). E mbassy Suite s Santa Clara: Gue stro o m, ma rke t a nd fitne ss c e nte r re lo c a tio n. ($10.7 millio n). Re side nc e Inn Orlando Se aWorld: Gue stro o m/ c o rrido r re no va tio n ($10.1 millio n) to b e c o mple te d in Q4. Re side nc e Inn T ampa Downtown: Gue stro o m, lo b b y a nd e xte rio r re no va tio n ($3.5 millio n) sla te d fo r c o mple tio n

in No ve mb e r.

Hilton T ampa We stshore : Gue stro o m a nd me e ting spa c e re no va tio n, No v 2017-April 2018 ($8.5 millio n). Re naissanc e Palm Springs: Gue stro o m, re sta ura nt, me e ting spa c e a nd pub lic a re a re no va tio n ($14 millio n). Courtyard Crystal City: Gue stro o m re no va tio ns, Oc t 2017 – Ma r 2018 ($10.4 millio n).

No n-Re c o urse De b t

23

(1) As o f Se pte mb e r 30, 2017 (2) Inve stme nt in Ashfo rd Inc . a t ma rke t va lue a s o f No ve mb e r 7, 2017

T

• tal E

nte r pr ise Value (1)

100%

NON- R

E COUR SE DE BT

100% PR

OPE R T Y L E VE L

, MOR

T GAGE DE BT

0%

C OR

POR AT E L E VE L

DE

BT

No n-re c o urse de b t

lowe r s r isk pr

• file o f

the pla tfo rm

BE

NE F IT S

Maximize s fle xibility

in a ll e c o no mic e nviro nme nts L

• ng -sta nding le nde r

r e lationships High le nde r inte r e st in

• ur hig h q ua lity ho te l

a sse ts

Churc hill Washingto n D.C.

(2)

Sto c k Pric e (As o f No v e mbe r 7, 2017) $6.20 F ully Dilute d Share s Outstanding 117.5

Equity Va lue $728.4

Plus: Pre fe rre d E quity 567.6 Plus: De bt 3,706.2

T

• ta l Ma rke t Ca pita liza tio n

$5,002.3

L e ss: Ne t Wo rking Capital (496.5)

T

• ta l Ente rprise Va lue

$4,505.8

Ca sh T a rg e t

24

(1) As o f Se pte mb e r 30, 2017 (2) At ma rke t va lue a s o f No ve mb e r 7, 2017

Ne t Wor king Capital(1)

25- 30%

C ASH T

O E QUIT Y MKT

C AP T

AR GE T

54%

C UR

R E NT

C ASH T

O

E

QUIT Y MKT

C AP

Ab ility to e xe c ute oppor

tunistic inve stme nts

BE

NE F IT S

He dge a g a inst e c o no mic unc e rta inty

One Oc e a n Jac kso nville , F L

$4.23

NWC / SHAR

E

Cash & Cash E quiv ale nts $393.4 Re stric te d Cash 133.0 Inv e stme nt in Se c uritie s 12.0 Ac c o unts Re c e iv able , ne t 60.4 Pre paid E xpe nse s 24.2 Due F ro m Affiliate s, ne t (14.0) Due fro m T hird Party Ho te l Manag e rs 16.6 Marke t Value o f Ashfo rd, Inc . Inv e stme nt(2) 48.9

T

• ta l Curre nt Asse ts

$674.4

Ac c o unts Payable , ne t & Ac c rue d E xpe nse s $152.4 Div ide nds Payable 25.5

T

• ta l Curre nt L

ia bilitie s $177.9 Ne t Wo rking Ca pita l $496.5

Va lue E nha nc e me nt thro ug h Re fina nc ing

25

I

NDIGO AT L ANT A – MAY 2017

5.98%  L +2.90%

Old Inte re st Ra te Ne w Inte re st Ra te

Cash flow savings of ~$585,000

in a nnua l de b t se rvic e with no c ha ng e in a sse t le ve ra g e

BOST

ON BACK BAY – O CT

2017 Cash flow savings of ~$2.8M in

a nnua l de b t se rvic e with no c ha ng e in a sse t le ve ra g e PRE

F E RRE D E QUIT Y – AUG 2017

8.5% 

Old Coupon

~$520,000 in a nnua l c a sh sa ving s

7.5%

Ne w Coupon

R

E F INANCE – O CT

2017

17-PACK

L +5.52% 

Old Inte re st Ra te

L +3.00%

Ne w Inte re st Ra te

E stima te d c a sh flow sa ving s of ~$9.8 million

in a nnua l d e b t se rvic e Minima l inc re a se in a sse t le ve ra g e

E xte nd d e b t ma turity

W Atla nta Downtown Atlanta, GA

4.38%  L +2.00%

Old Inte re st Ra te Ne w Inte re st Ra te

$5.4 $95.6 $254.0 $533.0 $710.7 $971.7 $1,154.8

200 400 600 800 1000 1200 1400 1600 2017 2018 2019 2020 2021 T he re a fte r Millio ns F ixe d-Ra te F lo a ting -Ra te

De bt Yie ld: 11.3% De bt Yie ld: 12.6% De bt Yie ld: 10.9% De bt Yie ld: 14.0%

De b t Ma turity(1),(2)

26

As o f Se pte mb e r 30, 2017 (1) Assume s e xte nsio n o ptio ns a re e xe rc ise d (2) Pro fo rma fo r Oc to b e r 2017 re fina nc e o f the Hilto n Bo sto n Ba c k Ba y a nd 17-Pa c k No te : All de b t yie ld sta tistic s a re b a se d o n E BIT DA to princ ipa l

2017

NO DE

BT

MAT

URI T I E S

2018

NO DE

BT

MAT

URI T I E S

5.4% T

OT AL PORT F OL IO WE IGHT E D AVE RAGE INT E RE ST

RAT

E

K e y T a ke a wa ys

27

Opportunistic pla tform foc use d on uppe r upsc a le , full- se rvic e hote ls Hig he st inside r owne rship Disc ipline d c a pita l ma na g e me nt Alig ne d a dvisory struc ture T a rg e ts de bt le ve ls of 55- 60% ne t de bt/ g ross a sse ts Attra c tive divide nd yie ld T a rg e ts c a sh le ve l of 25- 30%

• f tota l e quity ma rke t c a p

Supe rior long - te rm tota l sha re holde r re turn

No ve mb e r 2017