Ashford Hospitality Trust Inc. (AHT, Financial) filed Quarterly Report for the period ended 2009-06-30.
Ashford Hospitality Trust Inc is a self advised Maryland corporation and real estate investment trust organized to pursue opportunities in the lodging industry. Initial assets consist of six hotels comprised of four Embassy Suites and two Radisson properties as well as eight asset management and consulting agreements. Ashford Hospitality Trust Inc. has a market cap of $295 million; its shares were traded at around $3.09 with a P/E ratio of 2.3 and P/S ratio of 0.3. Ashford Hospitality Trust Inc. had an annual average earning growth of 73.6% over the past 5 years.
In March 2009, in order to take advantage of the declining LIBOR rates, we entered into a one-year flooridor with a financial institution for the period commencing December 14, 2009 and ending December 13, 2010 for a notional amount of $3.6 billion. The flooridor establishes a new floor rate of 0.75% for the original $1.8 billion interest rate floor we entered into on March 13, 2008. Under this new flooridor, the counterparty will pay us interest on the notional amount when the interest rates are below the original floor of 1.25% up to a maximum of 50 basis points on the notional amount. The upfront cost of this flooridor was $8.5 million. In addition, for the six months ended June 30, 2009, we entered into seven interest rate caps with total notional amounts of $283.0 million to cap the interest rates on mortgage loans with an aggregate principal amount of $283.0 million (aggregate principal balance at June 30, 2009 was $280.5 million) between 4.81% and 6%. Total price for these hedges was $233,000. These interest rate caps were designated as cash flow hedges.
On July 1, 2009, we purchased two one-year flooridors for an upfront cost of $22.3 million. The first flooridor, which is for a notional amount of $1.8 billion, is for the period commencing December 14, 2009 and ending December 13, 2010. Under the first flooridor, the counterparties will pay us interest on the notional amount when LIBOR rates are below 1.75% up to a maximum of 50 basis points. The second flooridor, also for a notional amount of $1.8 billion, is for a period commencing December 13, 2010 and ending December 13, 2011. Under the second flooridor, the counterparty will pay us interest on the notional amount when LIBOR rates are below 2.75% up to a maximum of 250 basis points. We have no further liability under these flooridors to the counterparties.
Revenue. Room revenues decreased $47.5 million, or 21.2%, during the three months ended June 30, 2009, (the 2009 quarter) compared to the three months ended June 30, 2008 (the 2008 quarter). Occupancy declined by 865 basis points from 76.65% to 68.00%. ADR declined by $16.36 to $129.29. Decline in market demand placed tremendous pressure on rates to maintain occupancy levels. Food and beverage experienced a similar decline of $15.6 million due to lower volume on catering and banquet events. Other hotel revenue which consists of ancillary revenues such as telecommunication, parking, spa, golf fees, and phone charges also saw a $1.9 million decline due to lower occupancy.
Asset management fees and other were $205,000 for the 2009 quarter and $921,000 for the 2008 quarter. The decrease is primarily related to an asset management consulting fee of $779,000 from a consulting agreement with a related party that expired in 2008.
Corporate General and Administrative. Corporate general and administrative expense decreased to $6.9 million for the 2009 quarter compared to $8.4 million for the 2008 quarter. These expenses declined $1.5 million in the 2009 quarter compared to the 2008 quarter, primarily due to decreases in (i) stock-based compensation of $659,000 as a result of certain restricted stock awards granted in earlier years at a higher cost per share that fully vested in the first quarter of 2009; (ii) accrued accounting and audit fees of $593,000; and (iii) other corporate expenses resulting from the continued cost containment plans implemented at the corporate level since December 2008 which include reductions in overhead from staff layoffs, salary freezes, and reduced benefits and fees along with other cost saving measures.
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Ashford Hospitality Trust Inc is a self advised Maryland corporation and real estate investment trust organized to pursue opportunities in the lodging industry. Initial assets consist of six hotels comprised of four Embassy Suites and two Radisson properties as well as eight asset management and consulting agreements. Ashford Hospitality Trust Inc. has a market cap of $295 million; its shares were traded at around $3.09 with a P/E ratio of 2.3 and P/S ratio of 0.3. Ashford Hospitality Trust Inc. had an annual average earning growth of 73.6% over the past 5 years.
Highlight of Business Operations:
Beginning in June 2009, we ceased making payments on the note payable of $29.1 million secured by the Hyatt Regency Dearborn hotel property, due to the fact that the operating cash flows from the hotel property are not anticipated to cover the principal and interest payments on the note and the related capital expenditures on the property. The lender issued a notice of default and an acceleration notice. We have not cured the notice of default and intend to fully settle the debt via a deed-in-lieu of foreclosure or foreclosure of the hotel property. As a result, we wrote down the hotel property to its estimated fair value at June 30, 2009 and recorded an impairment charge of $10.9 million. In determining the fair value of the property, we obtained a market analysis based on eight recent hotel sales in the Midwest region provided by a third party, those sales ranged from a low of $33,000 per key to a high of $125,000 perIn March 2009, in order to take advantage of the declining LIBOR rates, we entered into a one-year flooridor with a financial institution for the period commencing December 14, 2009 and ending December 13, 2010 for a notional amount of $3.6 billion. The flooridor establishes a new floor rate of 0.75% for the original $1.8 billion interest rate floor we entered into on March 13, 2008. Under this new flooridor, the counterparty will pay us interest on the notional amount when the interest rates are below the original floor of 1.25% up to a maximum of 50 basis points on the notional amount. The upfront cost of this flooridor was $8.5 million. In addition, for the six months ended June 30, 2009, we entered into seven interest rate caps with total notional amounts of $283.0 million to cap the interest rates on mortgage loans with an aggregate principal amount of $283.0 million (aggregate principal balance at June 30, 2009 was $280.5 million) between 4.81% and 6%. Total price for these hedges was $233,000. These interest rate caps were designated as cash flow hedges.
On July 1, 2009, we purchased two one-year flooridors for an upfront cost of $22.3 million. The first flooridor, which is for a notional amount of $1.8 billion, is for the period commencing December 14, 2009 and ending December 13, 2010. Under the first flooridor, the counterparties will pay us interest on the notional amount when LIBOR rates are below 1.75% up to a maximum of 50 basis points. The second flooridor, also for a notional amount of $1.8 billion, is for a period commencing December 13, 2010 and ending December 13, 2011. Under the second flooridor, the counterparty will pay us interest on the notional amount when LIBOR rates are below 2.75% up to a maximum of 250 basis points. We have no further liability under these flooridors to the counterparties.
Revenue. Room revenues decreased $47.5 million, or 21.2%, during the three months ended June 30, 2009, (the 2009 quarter) compared to the three months ended June 30, 2008 (the 2008 quarter). Occupancy declined by 865 basis points from 76.65% to 68.00%. ADR declined by $16.36 to $129.29. Decline in market demand placed tremendous pressure on rates to maintain occupancy levels. Food and beverage experienced a similar decline of $15.6 million due to lower volume on catering and banquet events. Other hotel revenue which consists of ancillary revenues such as telecommunication, parking, spa, golf fees, and phone charges also saw a $1.9 million decline due to lower occupancy.
Asset management fees and other were $205,000 for the 2009 quarter and $921,000 for the 2008 quarter. The decrease is primarily related to an asset management consulting fee of $779,000 from a consulting agreement with a related party that expired in 2008.
Corporate General and Administrative. Corporate general and administrative expense decreased to $6.9 million for the 2009 quarter compared to $8.4 million for the 2008 quarter. These expenses declined $1.5 million in the 2009 quarter compared to the 2008 quarter, primarily due to decreases in (i) stock-based compensation of $659,000 as a result of certain restricted stock awards granted in earlier years at a higher cost per share that fully vested in the first quarter of 2009; (ii) accrued accounting and audit fees of $593,000; and (iii) other corporate expenses resulting from the continued cost containment plans implemented at the corporate level since December 2008 which include reductions in overhead from staff layoffs, salary freezes, and reduced benefits and fees along with other cost saving measures.
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