Ashford Hospitality Trust, Inc.

AHT

US0441038694

Specialized REITs

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Apr. 18	Ashford Hospitality Trust Appoints Stephen Zsigray as CEO	MT
Apr. 09	Blackwells Capital Files Preliminary Proxy Statement with Securities and Exchange Commission	CI

ASHFORD HOSPITALITY TRUST : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

August 03, 2020 at 04:44 pm EDT

FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with the unaudited
financial statements and notes thereto appearing elsewhere herein. This report
contains forward-looking statements within the meaning of the federal securities
laws. Ashford Hospitality Trust, Inc. (the "Company," "we," "our" or "us")
cautions investors that any forward-looking statements presented herein, or
which management may express orally or in writing from time to time, are based
on management's beliefs and assumptions at that time.
Throughout this Form 10-Q, we make forward-looking statements that are subject
to risks and uncertainties. Forward-looking statements are generally
identifiable by use of forward-looking terminology such as "may," "will,"
"should," "potential," "intend," "expect," "anticipate," "estimate,"
"approximately," "believe," "could," "project," "predict," or other similar
words or expressions. Additionally, statements regarding the following subjects
are forward-looking by their nature:
•      the impact of the novel strain of coronavirus (COVID-19) and numerous
       governmental travel restrictions and other orders on our business;

• our business and investment strategy;

• anticipated or expected purchases or sales of assets;

• our projected operating results;

• completion of any pending transactions;




•      our ability to obtain future financing arrangements or restructure
       existing property level indebtedness;

• our understanding of our competition;

• market trends;

• projected capital expenditures; and

• the impact of technology on our operations and business.




Such forward-looking statements are based on our beliefs, assumptions, and
expectations of our future performance taking into account all information
currently known to us. These beliefs, assumptions, and expectations can change
as a result of many potential events or factors, not all of which are known to
us. If a change occurs, our business, financial condition, liquidity, results of
operations, plans, and other objectives may vary materially from those expressed
in our forward-looking statements. Additionally, the following factors could
cause actual results to vary from our forward-looking statements:
•      factors discussed in our Form 10-K for the year ended December 31, 2019,

as filed with the Securities and Exchange Commission on March 12, 2020,

including those set forth under the sections titled "Risk Factors,"

"Management's Discussion and Analysis of Financial Condition and Results

of Operations," "Business," and "Properties," as supplemented by our

Current Report on Form 8-K filed May 8, 2020, our subsequent Quarterly

Reports on Form 10-Q and other filings under the Exchange Act;

• adverse effects of the novel strain of coronavirus (COVID-19), including a

general reduction in business and personal travel and travel restrictions

in regions where our hotels are located;

• ongoing negotiations with our lenders regarding potential forbearance or


       the exercise by our lenders of their remedies for default under our loan
       agreements;

• actions by our lenders to accelerate loan balances and foreclose on the

hotel properties that are security for our loans that are in default;




•      general volatility of the capital markets and the market price of our
       common and preferred stock;

• the ability to complete the preferred stock exchange offering;

• general and economic business conditions affecting the lodging and travel

industry;

• changes in our business or investment strategy;

• availability, terms, and deployment of capital;

• unanticipated increases in financing and other costs, including a rise in

interest rates;

• changes in our industry and the market in which we operate, interest

rates, or local economic conditions;

• the degree and nature of our competition;

• actual and potential conflicts of interest with Ashford Inc. and its

subsidiaries (including Ashford LLC, Remington Hotels, Premier), Braemar,


       our executive officers and our non-independent directors;


•      changes in personnel of Ashford LLC or the lack of availability of
       qualified personnel;



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•      changes in governmental regulations, accounting rules, tax rates and
       similar matters;

• legislative and regulatory changes, including changes to the Internal


       Revenue Code of 1986, as amended (the "Code"), and related rules,
       regulations and interpretations governing the taxation of REITs; and

• limitations imposed on our business and our ability to satisfy complex

rules in order for us to qualify as a REIT for federal income tax

purposes.




When considering forward-looking statements, you should keep in mind the matters
summarized under "Item 1A. Risk Factors" in Part I of our 2019 10-K, as
supplemented by our Current Report on Form 8-K filed May 8, 2020 and this
Quarterly Report, and the discussion in this Management's Discussion and
Analysis of Financial Condition and Results of Operations, could cause our
actual results and performance to differ significantly from those contained in
our forward-looking statements. Additionally, many of these risks and
uncertainties are currently amplified by and will continue to be amplified by,
or in the future may be amplified by, the COVID-19 outbreak and the numerous
government travel restrictions imposed in response thereto. The extent to which
COVID-19 impacts us will depend on future developments, which are highly
uncertain and cannot be predicted with confidence, including the scope, severity
and duration of the pandemic, the actions taken to contain the pandemic or
mitigate its impact, and the direct and indirect economic effects of the
pandemic and containment measures, among others. Accordingly, we cannot
guarantee future results or performance. Readers are cautioned not to place
undue reliance on any of these forward-looking statements, which reflect our
views as of the date of this Quarterly Report. Furthermore, we do not intend to
update any of our forward-looking statements after the date of this Quarterly
Report to conform these statements to actual results and performance, except as
may be required by applicable law.
Overview
Based on our primary business objectives and forecasted operating conditions,
our current key priorities and financial strategies include, among other things:
•      adjusting cost and operational models due to the impact of COVID-19 on the

hotel industry;

• maintain maximum cash and cash equivalents liquidity;

• completion of the preferred stock exchange offering;

• negotiate forbearance and other agreements with lenders as necessary with

respect to our loans that are in default;

• disposition of non-core hotel properties;

• pursuing capital market activities to enhance long-term stockholder value;




•      implementing selective capital improvements designed to increase
       profitability;

• implementing effective asset management strategies to minimize operating

costs and increase revenues;

• financing or refinancing hotels on competitive terms;

• utilizing hedges and derivatives to mitigate risks; and

• making other investments or divestitures that our board of directors deems

appropriate.




Our current investment strategy is to focus on owning predominantly full-service
hotels in the upper upscale segments in domestic markets that have revenue per
available room ("RevPAR") generally less than twice the U.S. national average.
We believe that as supply, demand, and capital market cycles change, we will be
able to shift our investment strategy to take advantage of new lodging-related
investment opportunities as they may develop. Our board of directors may change
our investment strategy at any time without stockholder approval or notice. We
will continue to seek ways to benefit from the cyclical nature of the hotel
industry.
We are advised by Ashford LLC, a subsidiary of Ashford Inc., through an advisory
agreement. All of the hotel properties in our portfolio are currently
asset-managed by Ashford LLC. We do not have any employees. All of the services
that might be provided by employees are provided to us by Ashford LLC.
We do not operate any of our hotel properties directly; instead we employ hotel
management companies to operate them for us under management contracts. As of
June 30, 2020, Remington Hotels, a subsidiary of Ashford Inc., managed 79 of our
116 hotel properties and WorldQuest. Third-party management companies managed
the remaining hotel properties.
Ashford Inc. also provides other products and services to us or our hotel
properties through certain entities in which Ashford Inc. has an ownership
interest. These products and services include, but are not limited to project
management services, debt placement services, audio visual services, real estate
advisory services, insurance claims services, hypoallergenic premium rooms,
investment management services, broker-dealer and distribution services and
mobile key technology.

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Mr. Monty J. Bennett is chairman and chief executive officer of Ashford Inc.
and, together with Mr. Archie Bennett, Jr., as of June 30, 2020, owned
approximately 430,803 shares of Ashford Inc. common stock, which represented an
approximate 17.2% ownership interest in Ashford Inc., and owned 18,758,600
shares of Ashford Inc. Series D Convertible Preferred Stock, which is
exercisable (at an exercise price of $117.50 per share) into an additional
approximate 3,991,191 shares of Ashford Inc. common stock, which if exercised as
of June 30, 2020 would have increased the Bennetts' ownership interest in
Ashford Inc. to 68.1%. The 18,758,600 Series D Convertible Preferred Stock owned
by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned
by trusts.
Recent Developments
COVID-19, Management's Plans and Liquidity
In December 2019, COVID-19 was identified in Wuhan, China, which subsequently
spread to other regions of the world, and has resulted in significant travel
restrictions and extended shutdown of numerous businesses in every state in the
United States. In March 2020, the World Health Organization declared COVID-19 to
be a global pandemic. Since late February 2020, we have experienced a
significant decline in occupancy and RevPAR and we expect the significant
occupancy and RevPAR declines associated with COVID-19 to continue as we are
experiencing significant reservation cancellations as well as a significant
reduction in new reservations. The prolonged presence of the virus has resulted
in health and other government authorities imposing widespread restrictions on
travel and other businesses. The hotel industry and our portfolio have
experienced the postponement or cancellation of a significant number of business
conferences and similar events. Following the government mandates and health
official orders, in March 2020, the Company temporarily suspended operations at
23 of its 116 hotels and dramatically reduced staffing and expenses at its
hotels that remain operational. As of June 30, 2020 operations at five of the
Company's hotels remain temporarily suspended. COVID-19 has had a significant
negative impact on the Company's operations and financial results to date. The
full financial impact of the reduction in hotel demand caused by the pandemic
and suspension of operations at the Company's hotels cannot be reasonably
estimated at this time due to uncertainty as to its severity and duration. The
Company expects that the COVID-19 pandemic will have a significant negative
impact on the Company's results of operations, financial position and cash flow
for at least the remainder of 2020 and into 2021. As a result, the Company
suspended the quarterly cash dividend on its common shares for the first and
second quarters of 2020 and likely for all of 2020, suspended quarterly cash
dividend on its preferred stock for the second quarter, reduced planned capital
expenditures, and working closely with its hotel managers, significantly reduced
its hotels' operating expenses. The Company's advisor adopted a remote-work
policy at its corporate office in an effort to protect the health and safety of
its employees and does not anticipate these policies to have any adverse impact
on its ability to continue to operate its business.
Beginning on April 1, 2020, we did not make principal or interest payments under
nearly all of our loans, which constituted an "Event of Default" as such term is
defined under the applicable loan documents. Pursuant to the terms of the
applicable loan documents, such an Event of Default caused an automatic increase
in the interest rate on our outstanding loan balance for the period such Event
of Default remains outstanding. Following an Event of Default, our lenders can
generally elect to accelerate all principal and accrued interest payments that
remain outstanding under the applicable loan agreement and foreclose on the
applicable hotel properties that are security for such loans. The lenders who
hold the mortgage note secured by the Embassy Suites New York Manhattan Times
Square ($145.0 million mortgage loan) and the mortgage note secured by the
Hilton Scotts Valley hotel in Santa Cruz, California ($24.8 million mortgage
loan) have each sent us an acceleration notice which accelerated all payments
due under the applicable loan documents. In addition, the lender for the W Hotel
in Minneapolis, Minnesota ($51.6 million mortgage loan), the lender for our
Rockbridge Portfolio ($144.2 million mortgage loan), which is an eight hotel
portfolio, and the lender for the portfolio consisting of the Courtyard by
Marriott in Fort Lauderdale, Florida, Courtyard by Marriott in Louisville,
Kentucky and Marriott Residence Inn in Lake Buena Vista, Florida ($64.0 million
mortgage loan), have each sent to us a notice of UCC sale, which provides that
the respective lender will sell the subsidiaries of the Company that own the
respective hotels in a public auction. The Company is in the process of
negotiating forbearance agreements with its lenders. At this time, forbearance
agreements have been executed on some, but not all of our loans. On July 16,
2020, we reached a forbearance agreement with our lenders for the Highland Pool
loan, which is a $907.0 million loan secured by nineteen of our hotels. The
forbearance agreement allows the Company to defer interest payments for six
months in exchange for the Company's agreement to a repayment schedule of the
deferred interest payments. In the aggregate, including the Highland Pool loan,
we have entered into forbearance and other agreements with varying terms and
conditions that conditionally waive or defer payment defaults for loans with a
total outstanding principal balance of approximately $1.1 billion out of
approximately $4.1 billion in property level debt outstanding as of June 30,
2020. Additionally, certain of the Company's hotel properties are subject to
ground leases rather than a fee simple interest, with respect to all or a
portion of the real property at those hotels. It is possible the Company will
default on some or all of the ground leases within the next twelve months.
As of June 30, 2020, the Company held cash and cash equivalents of $165.5
million and restricted cash of $95.3 million. During the three months ended June
30, 2020, we utilized cash, cash equivalents and restricted cash of $106.2
million. We are currently experiencing significant variability in the operating
cash flows of our hotel properties, and we continue to negotiate

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forbearance agreements with our lenders. Additionally as discussed above we have
received various acceleration notices and UCC sale notices from our lenders. We
are also taking several steps to reduce our cash utilization and potentially
raise additional capital. All of these items create uncertainty surrounding
future cash flows. As a result of these uncertainties, management cannot
reasonably estimate how long the Company's current cash, cash equivalents and
restricted cash will last, but if our cash utilization going forward is
consistent with the second quarter of 2020 and we do not raise additional
capital, it is possible that the Company may utilize all of its cash, cash
equivalents and restricted cash within the next twelve months.
Based on these factors, the Company has determined that there is substantial
doubt about the Company's ability to continue as a going concern within one year
after the date the financial statements are issued. U.S. generally accepted
accounting principles require that in making this determination, the Company
cannot consider any remedies that are outside of the Company's control and have
not been fully implemented. As a result, the Company could not consider future
potential fundraising activities, whether through equity or debt offerings,
dispositions of hotel properties or the likelihood of obtaining forbearance
agreements as we could not conclude they were probable of being effectively
implemented. Any forbearance agreements will most likely lead to increased
costs, increased interest rates, additional restrictive covenants and other
possible lender protections. In addition to or in lieu of obtaining forbearance
agreements as described above, the Company could transfer the hotels securing
the mortgage loans to the respective lenders.
The spread of COVID-19 and the recent developments surrounding the global
pandemic are having significant negative impacts on our business. In response to
the impact of COVID-19 on the hospitality industry, the Company is deploying
numerous strategies and protocols to provide financial flexibility going forward
to navigate this crisis, including:
•      as of July 31, 2020, the Company has temporarily suspended operations at
       four hotel properties. The Company's remaining 112 hotel properties are
       open and operating;

• the Company has significantly reduced its planned spending for capital

expenditures for the fiscal year to a range of $30-$50 million;

• the Company has suspended its common dividend conserving approximately $7


       million per quarter;


•      the Company has suspended its preferred stock dividends conserving
       approximately $10.6 million per quarter;


•      the Company has taken proactive and aggressive actions to protect
       liquidity and reduce corporate expenses through the curtailment of all
       non-essential expenses resulting in an approximate 25% reduction in
       corporate, general and administrative and reimbursable expenses and will

continue to take all necessary additional actions to preserve capital and

liquidity;

• the Company ended the quarter with cash and cash equivalents of $165.5


       million and restricted cash of $95.3 million. The vast majority of the
       restricted cash is comprised of lender and manager held reserves. The
       Company is currently working with its property managers and lenders in
       order to utilize lender and manager held reserves to fund operating

shortfalls. At the end of the quarter, there was also $12.9 million due to

the Company from third-party hotel managers, which is the Company's cash

held by one of its property managers which is also available to fund hotel

operating costs; and

• the Company has partnered with local government agencies, medical staffing

organizations, and hotel brands to support COVID-19 response efforts. To

date, through various initiatives, 86 Ashford Trust hotels have provided


       temporary lodging for first responders, health care professionals, and
       other community residents impacted by the pandemic.


Pursuant to the terms of the Letter Agreement dated March 13, 2020 (the "Hotel
Management Letter Agreement"), in order to allow Remington Hotels to better
manage its corporate working capital and to ensure the continued efficient
operation of our hotels, we agreed to pay the base fee and to reimburse all
expenses on a weekly basis for the preceding week, rather than on a monthly
basis. The Hotel Management Letter Agreement went into effect on March 13, 2020
and will continue until terminated by us.
In April 2020, certain subsidiaries of the Company applied for and received
loans from Key Bank, N.A. under the PPP, which was established under the CARES
Act. All funds borrowed under the PPP were returned on or before May 7, 2020.
Additional Developments
On January 9, 2020, we refinanced our $43.8 million mortgage loan, secured by
the Le Pavillon in New Orleans, Louisiana. In connection with the refinance we
reduced the loan amount by $6.8 million. The new mortgage loan totals $37.0
million. The new mortgage loan is interest only and provides for an interest
rate of LIBOR + 3.40%. The stated maturity is January 2023 with two one-year
extension options, subject to the satisfaction of certain conditions. The
mortgage loan is secured by the Le Pavillon.

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On March 9, 2020, the Company sold the Crowne Plaza in Annapolis, Maryland for
approximately $5.1 million. The sale resulted in a gain of approximately $3.6
million for the three and six months ended June 30, 2020, which was included in
"gain (loss) on sale of assets and hotel properties" in the consolidated
statements of operations.
On March 20, 2020, Lismore Capital LLC ("Lismore"), a subsidiary of Ashford
Inc., entered into an agreement with the Company to seek modifications,
forbearances or refinancings of the Company's loans (the "Ashford Trust
Agreement"). Pursuant to the Ashford Trust Agreement, Lismore shall, during the
agreement term (which commenced on March 20, 2020 and shall end on the date that
is twelve months following the commencement date, or upon it being terminated by
Ashford Trust on not less than thirty days written notice) negotiate the
refinancing, modification or forbearance of the existing mortgage debt on
Ashford Trust's hotels. For the purposes of the Ashford Trust Agreement,
financing shall include, without limitation, senior or subordinate loan
financing, provided in any single transaction or a combination of transactions,
including, mortgage loan financing, mezzanine loan financing, or subordinate
loan financing encumbering the applicable hotel or unsecured loan financing.
On April 17, 2020, the Company was notified by the New York Stock Exchange (the
"NYSE") that the average closing price of the Company's common stock over the
prior 30 consecutive trading-day period was below $1.00 per share, which is the
minimum average closing price per share required to maintain listing on the NYSE
under Section 802.01C of the NYSE Listed Company Manual.
In June 2020, our board of directors approved a reverse stock split of our
issued and outstanding common stock at a ratio of 1-for-10. This reverse stock
split converted every ten issued and outstanding shares of common stock into one
share of common stock. The reverse share split was effective as of the close of
business on July 15, 2020. As a result of the reverse stock split, the number of
shares of common stock outstanding was reduced from approximately 104.8 million
shares to approximately 10.5 million shares. Additionally, the number of
outstanding common units, Long-Term Incentive Plan ("LTIP") units and
Performance LTIP units was reduced from approximately 20.5 million units to
approximately 2.1 million units. All common stock, common units, LTIP units,
Performance LTIP units, PSUs and RSUs as well as per share data related to these
classes of equity have been updated in the accompanying consolidated financial
statements to reflect this reverse stock split for all periods presented. On
August 3, 2020, the NYSE notified the Company that it had cured its
non-compliance with the NYSE's minimum average closing price per share standard
because the average closing price of our common stock was above $1.00 per share
on July 31, 2020 and for the 30 consecutive trading-day period ending July 31,
2020.
Effective May 13, 2020, Douglas A. Kessler voluntarily resigned as President and
Chief Executive Officer to pursue other professional opportunities. On May 14,
2020, the board of directors appointed J. Robison Hays, III as the Company's new
President and Chief Executive Officer.
On July 1, 2020, the Company amended and restated the agreement with Lismore
with an effective date of April 6, 2020. Pursuant to the amended and restated
agreement, the term of the agreement was extended to 24 months following the
commencement date. In connection with the services provided by Lismore under the
amended and restated agreement, Lismore is entitled to receive a fee of
approximately $2.6 million in three equal installments of approximately $857,000
per month beginning July 20, 2020, and ending on September 20, 2020. Lismore is
also entitled to receive a fee that is calculated and payable as follows: (i) a
fee equal to 25 basis points (0.25%) of the amount of a loan, payable upon the
acceptance by the applicable lender of any forbearance or extension of such
loan, or in the case where a third-party agent or contractor engaged by the
Company has secured an extension of the maturity date equal to or greater than
12 months of any such loan, then the amount payable to Lismore shall be reduced
to 10 basis points (0.10%); (ii) a fee equal to 75 basis points (0.75%) of the
amount of any principal reduction of a loan upon the acceptance by any lender of
any principal reduction of such loan; and (iii) a fee equal to 150 basis points
(1.50%) of the implied conversion value (but in any case, no less than 50%
percent of the face value of such loan or loans) of a loan upon the acceptance
by any lender of any debt to equity conversion of such loan.
At the time of amendment, the Company had paid Lismore approximately $8.3
million, in the aggregate, pursuant to the original agreement. Under the amended
and restated agreement, the Company is still entitled, in the event that the
Company does not complete, for any reason, extensions or forbearances during the
term of the agreement equal to or greater than approximately $4.1 billion, to
offset, against any fees the Company or its affiliates owe pursuant to the
advisory agreement, a portion of the fee previously paid by the Company to
Lismore equal to the product of (x) approximately $4.1 billion minus the amount
of extensions or forbearances completed during the term of the agreement
multiplied by (y) 0.125%. Upon entering into the agreement with Lismore, the
Company made a payment of $5.1 million. No amounts under this payment can be
clawed back. As of June 30, 2020, the Company has also paid $2.6 million related
to periodic installments of which $303,000 has been expensed in accordance with
the agreement and $2.2 million may be offset against future fees under the
agreement that are eligible for claw back under the agreement. Further, the
Company has paid $606,000 in success fees under the agreement in connection with
each signed forbearance or other agreement, of which no amounts are available
for claw back. As of June 30, 2020, the Company has recognized expense of $1.6
million, which is included in "write-off of premiums, loan costs and exit fees,"
and approximately $6.7 million is included in "other assets."

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On July 20, 2020, the Company filed a registration statement on Form S-4 with
the Securities and Exchange Commission (the "Form S-4). The Company is offering
to exchange any and all of the outstanding shares of the following series of its
preferred stock (8.45% Series D Cumulative Preferred Stock, 7.375% Series F
Cumulative Preferred Stock, 7.375% Series G Cumulative Preferred Stock, 7.50%
Series H Cumulative Preferred Stock and 7.50% Series I Cumulative Preferred
Stock) for, at the election of each holder, consideration in the form of cash or
shares of Company common stock.
On March 16, 2020, the Company announced that in light of the uncertainty
created by the effects of COVID-19, the annual cash retainer for each
independent director serving on the Company's board of directors would be
temporarily reduced by 25% and would continue in effect until the board of
directors determined in its discretion that the effects of COVID-19 had
subsided. The Company also disclosed at that time that any amounts relinquished
pursuant to the reduction in fees may be paid in the future, as determined by
the board of directors in its discretion. On August 3, 2020, the Company
announced that for fiscal year 2020, the independent directors will receive the
full value of their annual cash retainer (without reduction). However, all
remaining quarterly installments of the annual cash retainer (and any additional
cash retainers for committee service or service as lead director), will instead
be paid in either fully vested shares of common stock or LTIP units (at each
director's election). The board of directors currently intends to continue
paying the value of all cash retainers to independent directors in the form of
equity through the Company's 2021 Annual Meeting of Stockholders, at which time
the board of directors currently intends to re-examine the program.
Key Indicators of Operating Performance
We use a variety of operating and other information to evaluate the operating
performance of our business. These key indicators include financial information
that is prepared in accordance with GAAP as well as other financial measures
that are non-GAAP measures. In addition, we use other information that may not
be financial in nature, including statistical information and comparative data.
We use this information to measure the operating performance of our individual
hotels, groups of hotels and/or business as a whole. We also use these metrics
to evaluate the hotels in our portfolio and potential acquisitions to determine
each hotel's contribution to cash flow and its potential to provide attractive
long-term total returns. These key indicators include:
•      Occupancy. Occupancy means the total number of hotel rooms sold in a given

period divided by the total number of rooms available. Occupancy measures

the utilization of our hotels' available capacity. We use occupancy to


       measure demand at a specific hotel or group of hotels in a given period.


•      ADR. ADR means average daily rate and is calculated by dividing total

hotel rooms revenues by total number of rooms sold in a given period. ADR

measures average room price attained by a hotel and ADR trends provide

useful information concerning the pricing environment and the nature of

the customer base of a hotel or group of hotels. We use ADR to assess the


       pricing levels that we are able to generate.


•      RevPAR. RevPAR means revenue per available room and is calculated by
       multiplying ADR by the average daily occupancy. RevPAR is one of the
       commonly used measures within the hotel industry to evaluate hotel

operations. RevPAR does not include revenues from food and beverage sales

or parking, telephone or other non-rooms revenues generated by the

property. Although RevPAR does not include these ancillary revenues, it is

generally considered the leading indicator of core revenues for many

hotels. We also use RevPAR to compare the results of our hotels between

periods and to analyze results of our comparable hotels (comparable hotels

represent hotels we have owned for the entire period). RevPAR improvements

attributable to increases in occupancy are generally accompanied by

increases in most categories of variable operating costs. RevPAR

improvements attributable to increases in ADR are generally accompanied by

increases in limited categories of operating costs, such as management

fees and franchise fees.




RevPAR changes that are primarily driven by changes in occupancy have different
implications for overall revenues and profitability than changes that are driven
primarily by changes in ADR. For example, an increase in occupancy at a hotel
would lead to additional variable operating costs (including housekeeping
services, utilities and room supplies) and could also result in increased other
operating department revenue and expense. Changes in ADR typically have a
greater impact on operating margins and profitability as they do not have a
substantial effect on variable operating costs.
Occupancy, ADR and RevPAR are commonly used measures within the lodging industry
to evaluate operating performance. RevPAR is an important statistic for
monitoring operating performance at the individual hotel level and across our
entire business. We evaluate individual hotel RevPAR performance on an absolute
basis with comparisons to budget and prior periods, as well as on a regional and
company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue is
dictated by demand (as measured by occupancy), pricing (as measured by ADR) and
our available supply of hotel rooms.
We also use funds from operations ("FFO"), Adjusted FFO, earnings before
interest, taxes, depreciation and amortization for real estate ("EBITDAre") and
Adjusted EBITDAre as measures of the operating performance of our business. See
"Non-GAAP Financial Measures."

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RESULTS OF OPERATIONS
Revenue per available room, or RevPAR, is a commonly used measure within the
hotel industry to evaluate hotel operations. RevPAR is defined as the product of
the ADR charged and the average daily occupancy achieved. RevPAR does not
include revenues from food and beverage or parking, telephone, or other guest
services generated by the property. Although RevPAR does not include these
ancillary revenues, it is generally considered the leading indicator of core
revenues for many hotels. We also use RevPAR to compare the results of our
hotels between periods and to analyze results of our comparable hotels
(comparable hotels represent hotels we have owned for the periods under
comparison). RevPAR improvements attributable to increases in occupancy are
generally accompanied by increases in most categories of variable operating
costs. RevPAR improvements attributable to increases in ADR are generally
accompanied by increases in limited categories of operating costs, such as
management fees and franchise fees.
The following table summarizes changes in key line items from our consolidated
statements of operations (in thousands):

                                        Three Months Ended June 30,         Favorable/         Six Months Ended June 30,         Favorable/
                                                                          (Unfavorable)                                        (Unfavorable)
                                           2020               2019            Change              2020             2019            Change
Total revenue                        $       43,065       $  415,148     $

(372,083 ) $ 324,942 $ 773,866 $ (448,924 ) Total hotel operating expenses

              (66,555 )       (251,693 )

185,138 (268,265 ) (480,179 ) 211,914 Property taxes, insurance and other (20,700 ) (21,762 )

            1,062           (41,172 )       (42,159 )              987
Depreciation and amortization               (65,016 )        (67,511 )            2,495          (131,366 )      (134,689 )            3,323
Impairment charges                          (27,605 )         (6,533 )          (21,072 )         (55,218 )        (6,533 )          (48,685 )
Transaction costs                                 -               (2 )                2                 -              (2 )                2
Advisory services fee                       (10,216 )        (16,281 )            6,065           (25,515 )       (32,585 )            7,070
Corporate, general and                       (4,708 )         (2,917 )           (1,791 )          (8,200 )        (5,518 )           (2,682 )

administrative


Gain (loss) on sale of assets and                (6 )            328               (334 )           3,617             561              3,056
hotel properties
Operating income (loss)                    (151,741 )         48,777           (200,518 )        (201,177 )        72,762           (273,939 )
Equity in earnings (loss) of                    (79 )           (867 )              788              (158 )        (1,930 )            1,772
unconsolidated entities
Interest income                                  41              785               (744 )             652           1,566               (914 )
Other income (expense)                       (3,149 )           (338 )           (2,811 )          (1,627 )          (654 )             (973 )

Interest expense and amortization of (88,082 ) (67,987 )

(20,095 ) (145,167 ) (134,153 ) (11,014 ) loan costs Write-off of premiums, loan costs

            (1,935 )            (90 )           (1,845 )          (2,030 )        (2,152 )              122
and exit fees
Unrealized gain (loss) on marketable            479              598               (119 )            (998 )         1,406             (2,404 )

securities


Unrealized gain (loss) on                       192            1,476             (1,284 )           4,614          (1,518 )            6,132

derivatives


Income tax (expense) benefit                  2,188           (3,706 )            5,894             1,885          (3,301 )            5,186
Net income (loss)                          (242,086 )        (21,352 )         (220,734 )        (344,006 )       (67,974 )         (276,032 )
(Income) loss attributable to
noncontrolling interest in
consolidated entities                           120              (14 )              134               168              12                156
Net (income) loss attributable to
redeemable noncontrolling interests
in operating partnership                     37,350            5,084             32,266            55,021          13,663             41,358

Net income (loss) attributable to $ (204,616 ) $ (16,282 ) $


   (188,334 )   $    (288,817 )     $ (54,299 )   $     (234,518 )
the Company



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All hotel properties owned during the three and six months ended June 30, 2020
and 2019 have been included in our results of operations during the respective
periods in which they were owned. Based on when a hotel property was acquired or
disposed, operating results for certain hotel properties are not comparable for
the three and six months ended June 30, 2020 and 2019. The hotel properties
listed below are not comparable hotel properties for the periods indicated and
all other hotel properties are considered comparable hotel properties. The
following acquisitions and dispositions affect reporting comparability related
to our consolidated financial statements:
             Hotel Property                     Location            Type

Date


Embassy Suites New York Manhattan Times
Square (2)                                 New York, NY          Acquisition   January 22, 2019
Hilton Santa Cruz/Scotts Valley (2)        Santa Cruz, CA        Acquisition   February 26, 2019
San Antonio Marriott (1)                   San Antonio, TX       Disposition   August 2, 2019
Hilton Garden Inn Wisconsin Dells (1)      Wisconsin Dells, WI   Disposition   August 6, 2019
Courtyard Savannah (1)                     Savannah, GA          Disposition   August 14, 2019
SpringHill Suites Jacksonville (1)         Jacksonville, FL      Disposition   December 3, 2019
Crowne Plaza Annapolis (1)                 Annapolis, MD

Disposition March 9, 2020

____________________________________

(1) Collectively referred to as "Hotel Dispositions"

(2) Collectively referred to as "Hotel Acquisitions"

The following table illustrates the key performance indicators of all hotel properties and WorldQuest owned for the periods indicated:


                                         Three Months Ended June 30,

Six Months Ended June 30,


                                           2020               2019              2020               2019

RevPAR (revenue per available room) $ 16.48 $ 139.86 $ 55.59 $ 130.86 Occupancy

                                    14.83 %             80.74 %          36.73 %            76.83 %
ADR (average daily rate)             $      111.17       $      173.22

$ 151.36 $ 170.33




The following table illustrates the key performance indicators of the 116 and
114 comparable hotel properties and WorldQuest that were included for the full
three and six months ended June 30, 2020 and 2019, respectively:
                                         Three Months Ended June 30,

Six Months Ended June 30,


                                           2020               2019              2020               2019

RevPAR (revenue per available room) $ 16.48 $ 141.18 $ 55.41 $ 131.20 Occupancy

                                    14.83 %             80.87 %          36.46 %            76.85 %
ADR (average daily rate)             $      111.17       $      174.57

$ 151.96 $ 170.72




Comparison of the Three Months Ended June 30, 2020 and 2019
Net Income (Loss) Attributable to the Company. Net loss attributable to the
Company increased $188.3 million, from $16.3 million for the three months ended
June 30, 2019 (the "2019 quarter") to $204.6 million for the three months ended
June 30, 2020 (the "2020 quarter") as a result of the factors discussed below.
Revenue. Rooms revenue from our hotel properties and WorldQuest decreased $290.8
million, or 88.6%, to $37.4 million in the 2020 quarter compared to the 2019
quarter. This decrease is attributable to lower rooms revenue of $7.6 million
from our Hotel Dispositions and $283.2 million at our comparable hotel
properties and WorldQuest as a result of the COVID-19 pandemic. Our comparable
hotel properties experienced a decrease of 36.3% in room rates and a decrease of
6,604 basis points in occupancy.
Food and beverage revenue decreased $66.1 million, or 98.2%, to $1.2 million.
This decrease is attributable to lower food and beverage revenue of $1.1 million
from our Hotel Dispositions and $65.0 million at our comparable hotel properties
and WorldQuest as a result of the COVID-19 pandemic.
Other hotel revenue, which consists mainly of Internet access, parking, spa and
business interruption revenue, decreased $14.3 million, or 77.5%, to $4.2
million. This decrease is primarily attributable to a decrease of $319,000 from
our Hotel Dispositions, $13.9 million at our comparable hotel properties as a
result of the COVID-19 pandemic and lower business interruption revenue

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of $91,000. In the 2019 quarter, we received $91,000 of business interruption
income related to SpringHill Suites BWI Hotel. Other non-hotel revenue decreased
$847,000, or 75.4%, to $276,000 in the 2020 quarter as compared to the 2019
quarter.
Hotel Operating Expenses. Hotel operating expenses decreased $185.1 million, or
73.6%, to $66.6 million. Hotel operating expenses consist of direct expenses
from departments associated with revenue streams and indirect expenses
associated with support departments and management fees. Direct expenses
decreased $100.2 million in the 2020 quarter as compared to the 2019 quarter, as
a result of the COVID-19 pandemic, which was comprised of a decrease of $2.5
million from our Hotel Dispositions and $97.7 million from our comparable hotel
properties and WorldQuest. Direct expenses were 40.1% of total hotel revenue for
the 2020 quarter and 28.3% for the 2019 quarter. Indirect expenses and
management fees decreased $84.9 million in the 2020 quarter as compared to the
2019 quarter, which was comprised of a decrease of $3.5 million from our Hotel
Dispositions and $81.5 million from our comparable hotel properties and
WorldQuest as a result of the COVID-19 pandemic.
Property Taxes, Insurance and Other. Property taxes, insurance and other expense
decreased $1.1 million, or 4.9%, to $20.7 million during the 2020 quarter
compared to the 2019 quarter, which was primarily due to decrease of $659,000
from our Hotel Dispositions and $403,000 at our comparable hotel properties and
WorldQuest.
Depreciation and Amortization. Depreciation and amortization decreased $2.5
million, or 3.7%, to $65.0 million during the 2020 quarter compared to the 2019
quarter, which was primarily due to a decrease of $1.5 million from our Hotel
Dispositions and $986,000 from our comparable hotel properties and WorldQuest.
Impairment Charges. In the 2020 quarter, we recorded an impairment charge of
$27.6 million. On July 9, 2020, the non-recourse mortgage loan secured by eight
hotel properties matured. The lender has provided notice of UCC sale, which
provides that the respective lender will sell the subsidiaries of the Company
that own the respective hotels in a public auction. As a result, as of June 30,
2020, the estimated fair value of each hotel property was compared to its
carrying value. The impairment charge was comprised of $1.7 million at the
Columbus Hampton Inn Easton, $1.8 million at the Canonsburg Homewood Suites
Pittsburgh Southpointe, $9.5 million at the Billerica Courtyard, $6.1 million at
the Wichita Courtyard, $3.0 million at the Washington Hampton Inn Pittsburgh
Meadow Lands, $3.0 million at the Pittsburgh Hampton Inn Waterfront West
Homestead and $2.4 million at the Stillwater Residence Inn. In the 2019 quarter,
we recorded an impairment charge of $6.5 million that was comprised of $5.1
million at the Courtyard Savannah Downtown and $1.4 million at the Wisconsin
Dells Hilton Garden Inn related to their disposition.
Advisory Services Fee. Advisory services fee decreased $6.1 million, or 37.3%,
to $10.2 million in the 2020 quarter compared to the 2019 quarter. The advisory
services fee represents fees incurred in connection with the advisory agreement
between Ashford Inc. and the Company. In the 2020 quarter, the advisory services
fee was comprised of a base advisory fee of $8.6 million, equity-based
compensation of $92,000, which is inclusive of a $1.9 million credit related to
PSU forfeitures, associated with equity grants of our common stock and LTIP
units awarded to the officers and employees of Ashford Inc. and reimbursable
expenses of $1.6 million. In the 2019 quarter, the advisory services fee was
comprised of a base advisory fee of $9.4 million, equity-based compensation of
$4.5 million associated with equity grants of our common stock and LTIP units
awarded to the officers and employees of Ashford Inc., reimbursable expenses of
$3.0 million and a credit to incentive fee of $636,000.
Corporate, General and Administrative. Corporate, general and administrative
expense increased $1.8 million, or 61.4%, to $4.7 million during the 2020
quarter compared to the 2019 quarter. The increase was primarily attributable to
$1.7 million of legal and professional fees, $316,000 of reimbursed operating
expenses of Ashford Securities paid by Ashford Trust and other miscellaneous
expenses of $46,000, partially offset by lower public company costs of $229,000.
Gain (Loss) on Sale of Assets and Hotel Properties. Gain (Loss) on sale of
assets and hotel properties changed $334,000 from a gain of $328,000 in the 2019
quarter to a loss of $6,000 in the 2020 quarter.
Equity in Earnings (Loss) of Unconsolidated Entities. Equity in loss of
unconsolidated entities decreased $788,000, or 90.9% to $79,000 during the 2020
quarter compared to the 2019 quarter. The 2020 quarter included equity in loss
of $79,000 from OpenKey. The 2019 quarter included equity in loss of $767,000
from Ashford Inc. and $100,000 from OpenKey.
Interest Income. Interest income was $41,000 and $785,000 for the 2020 quarter
and the 2019 quarter, respectively.
Other Income (Expense). Other expense increased $2.8 million, or 831.7%, to $3.1
million during the 2020 quarter compared to the 2019 quarter. In the 2020
quarter, we recorded other expense of $271,000 related to CMBX premiums and
interest paid on collateral and a realized loss of $3.0 million on interest rate
floors. These expenses were partially offset by other income of $118,000 and a
realized gain on marketable securities of $4,000. In the 2019 quarter, we
recorded other expense of $271,000 related to CMBX premiums and interest paid on
collateral and a realized loss of $225,000 on interest rate floors. These
expenses were partially offset by dividend income of $74,000, other income of
$65,000 and a realized gain on marketable securities of $19,000.

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Interest Expense and Amortization of Loan Costs. Interest expense and
amortization of loan costs increased $20.1 million, or 29.6%, to $88.1 million
during the 2020 quarter compared to the 2019 quarter. The increase is due to
accruals for additional default interest and late payment charges totaling $43.6
million. These increases were partially offset by lower interest expense and
amortization of loan costs of $22.6 million at our comparable hotel properties
primarily due to lower LIBOR rates and $926,000 from our Hotel Dispositions. The
average LIBOR rates in the 2020 quarter and the 2019 quarter were 0.35% and
2.44%, respectively.
Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan
costs and exit fees increased $1.8 million to $1.9 million in the 2020 quarter
compared to the 2019 quarter. In the 2020 quarter, we executed several
amendments with various lenders, which included deferral of debt service
payments and allowed the use of reserves for property-level operating shortfalls
and/or to cover debt service payments. Third-party fees incurred in conjunction
with these amendments were $336,000 and fees paid to Lismore were $1.6 million,
totaling $1.9 million. In the 2019 quarter, we incurred other costs of $90,000.
Unrealized Gain (Loss) on Marketable Securities. Unrealized gain on marketable
securities was $479,000 in the 2020 quarter and $598,000 in the 2019 quarter,
which are based on changes in closing market prices during the quarter.
Unrealized Gain (Loss) on Derivatives. Unrealized gain on derivatives decreased
$1.3 million, or 87.0%, to $192,000 in the 2020 quarter compared to
the 2019 quarter. In the 2020 quarter, we recognized unrealized gains of $3.4
million on interest rate floors of which $3.0 million is associated with the
recognition of realized losses from the expiration of interest rate floors,
partially offset by an unrealized loss of $3.2 million from CMBX tranches and
$19,000 associated with interest rate caps. In the 2019 quarter, we recognized
unrealized gains of $2.1 million from interest rate floors and $225,000
associated with the recognition of realized losses from the expiration of
interest rate floors, partially offset by an unrealized loss of $393,000 from
CMBX tranches and $472,000 associated with interest rate caps. The fair value of
interest rate floors and interest rate caps are primarily based on movements in
the LIBOR forward curve and the passage of time. The fair value of credit
default swaps is based on the change in value of CMBX indices.
Income Tax (Expense) Benefit. Income tax (expense) benefit changed $5.9
million, from income tax expense of $3.7 million in the 2019 quarter to an
income tax benefit of $2.2 million in the 2020 quarter. This change was
primarily due to a decrease in the profitability of our TRS entities in
the 2020 quarter compared to the 2019 quarter.
(Income) Loss Attributable to Noncontrolling Interest in Consolidated Entities.
Our noncontrolling interest partner in consolidated entities were allocated a
loss of $120,000 and income of $14,000 in the 2020 quarter and the 2019 quarter,
respectively.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in
Operating Partnership. Net loss attributable to redeemable noncontrolling
interests in operating partnership increased $32.3 million, from $5.1 million in
the 2019 quarter to $37.4 million in the 2020 quarter. Redeemable noncontrolling
interests represented ownership interests of 14.79% and 15.88% in the operating
partnership at June 30, 2020 and 2019, respectively.
Comparison of the Six Months Ended June 30, 2020 and 2019
Net Income (Loss) Attributable to the Company. Net loss attributable to the
Company increased $234.5 million from $54.3 million for the six months ended
June 30, 2019 (the "2019 period") to $288.8 million for the six months ended
June 30, 2020 (the "2020 period") as a result of the factors discussed below.
Revenue. Rooms revenue from our hotel properties and WorldQuest decreased $355.4
million, or 58.4%, to $253.2 million in the 2020 period compared to the 2019
period. This decrease is attributable to lower rooms revenue of $334.3 million
at our comparable hotel properties and WorldQuest as a result of the COVID-19
pandemic, $13.4 million from our Hotel Dispositions and $7.8 million from our
Hotel Acquisitions. Our comparable hotel properties experienced an decrease of
11.0% in room rates and a decrease of 4,039 basis points in occupancy.
Food and beverage revenue decreased $79.2 million, or 61.7%, to $49.1 million in
the 2020 period compared to the 2019 period. This decrease is attributable
to lower food and beverage revenue of $76.5 million at our comparable hotel
properties as a result of the COVID-19 pandemic and WorldQuest, $2.5 million
from our Hotel Dispositions and $279,000 from our Hotel Acquisitions.
Other hotel revenue, which consists mainly of Internet access, parking, spa and
business interruption revenue, decreased $13.2 million, or 38.0%, to $21.5
million in the 2020 period compared to the 2019 period. This decrease is
attributable to lower other revenue of $12.8 million from our comparable hotel
properties and WorldQuest as a result of the COVID-19 pandemic, $595,000 from
our Hotel Dispositions and lower business interruption revenue of $91,000,
partially offset by higher other revenue of $326,000 from our Hotel
Acquisitions. In the 2019 period, we received $91,000 of business interruption
income related to SpringHill Suites

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BWI Hotel. No business interruption income was recorded in the 2020 period.
Other non-hotel revenue decreased $1.1 million, or 52.3%, to $1.0 million in the
2020 period.
Hotel Operating Expenses. Hotel operating expenses decreased $211.9 million,
or 44.1%, to $268.3 million in the 2020 period compared to the 2019 period.
Hotel operating expenses consist of direct expenses from departments associated
with revenue streams and indirect expenses associated with support departments
and management fees. Direct expenses decreased $115.4 million in the 2020 period
compared to the 2019 period, which was comprised of a decrease of $108.7 million
from our comparable hotel properties and WorldQuest as a result of the COVID-19
pandemic, $4.5 million from our Hotel Dispositions and $2.1 million from our
Hotel Acquisitions. Direct expenses were 33.4% of total hotel revenue for 2020
and 29.0% for the 2019 period. Indirect expenses and management fees decreased
$96.5 million in the 2020 period compared to the 2019 period, which was
comprised of a decrease of $88.8 million from our comparable hotel properties
and WorldQuest as a result of the COVID-19 pandemic, $6.2 million from our Hotel
Dispositions and $1.5 million from our Hotel Acquisitions.
Property Taxes, Insurance and Other. Property taxes, insurance and other expense
decreased $987,000 or 2.3%, to $41.2 million in the 2020 period compared to the
2019 period, which was primarily due to an decrease of $1.1 million from our
Hotel Dispositions and $664,000 at our comparable hotel properties, partially
offset by an increase of $236,000 from our Hotel Acquisitions and the receipt of
a property tax refund of $590,000 in the 2019 period.
Depreciation and Amortization. Depreciation and amortization decreased $3.3
million or 2.5%, to $131.4 million in the 2020 period compared to the 2019
period, which was primarily due to $2.6 million from our Hotel Dispositions,
$662,000 from our Hotel Acquisitions and $28,000 at our comparable hotel
properties and WorldQuest.
Impairment Charges. Impairment charges increased $48.7 million, or 745.2%,
to $55.2 million in the 2020 period compared to the 2019 period. In the first
quarter of 2020 we recorded an impairment charge of $27.6 million that was
comprised of $13.9 million at the Columbus Hampton Inn Easton, $10.0 million at
the Canonsburg Homewood Suites Pittsburgh Southpointe and $3.7 million at the
Phoenix Hampton Inn Airport North as a result of reduced estimated cash flows
resulting from the COVID-19 pandemic and changes to the expected holding periods
of these hotel properties. In the second quarter we recorded an impairment
charge of $27.6 million. On July 9, 2020, the non-recourse mortgage loan secured
by eight hotel properties matured. The lender has provided notice of UCC sale,
which provides that the respective lender will sell the subsidiaries of the
Company that own the respective hotels in a public auction. As a result, as of
June 30, 2020, the estimated fair value of each hotel property was compared to
its carrying value. The impairment charge was comprised of $1.7 million at the
Columbus Hampton Inn Easton, $1.8 million at the Canonsburg Homewood Suites
Pittsburgh Southpointe, $9.5 million at the Billerica Courtyard, $6.1 million at
the Wichita Courtyard, $3.0 million at the Washington Hampton Inn Pittsburgh
Meadow Lands, $3.0 million at the Pittsburgh Hampton Inn Waterfront West
Homestead and $2.4 million at the Stillwater Residence Inn. We recorded an
impairment charge of $6.5 million in the 2019 period, which was comprised of
$5.1 million at the Courtyard Savannah Downtown and $1.4 million at the
Wisconsin Dells Hilton Garden Inn.
Advisory Services Fee. Advisory services fee decreased $7.1 million, or 21.7%,
to $25.5 million in the 2020 period compared to the 2019 period. The advisory
services fee represents fees incurred in connection with the advisory agreement
between Ashford Inc. and the Company. In the 2020 period, the advisory services
fee was comprised of a base advisory fee of $17.5 million, equity-based
compensation of $4.6 million associated with equity grants of our common stock
and LTIP units awarded to the officers and employees of Ashford Inc., which is
inclusive of a $1.9 million credit related to PSU forfeitures, and reimbursable
expenses of $3.4 million. In the 2019 period, the advisory services fee was
comprised of a base advisory fee of $18.4 million, equity-based compensation of
$8.8 million associated with equity grants of our common stock and LTIP units
awarded to the officers and employees of Ashford Inc. and reimbursable expenses
of $5.4 million.
Corporate, General and Administrative. Corporate, general and administrative
expense increased $2.7 million, or 48.6%, to $8.2 million in the 2020 period
compared to the 2019 period. The increase was primarily attributable to higher
legal and professional fees of $2.0 million and $1.0 of reimbursed operating
expenses of Ashford Securities paid by Ashford Trust, partially offset by lower
public company costs of $174,000 and $172,000 of other miscellaneous expenses.
Gain (Loss) on Sale of Assets and Hotel Properties. Gain on sale of assets and
hotel properties was $3.6 million and $561,000 in the 2020 and 2019 periods,
respectively. The gain in the 2020 period of $3.6 million was related to the
sale of the Annapolis Crowne Plaza. The gain in the 2019 period was related to
the sale of assets at the Santa Fe La Posada, Hilton Santa Cruz/Scotts Valley
and the Embassy Suites New York Manhattan Times Square related to ERFP.
Equity in Earnings (Loss) of Unconsolidated Entities. Equity in loss of
unconsolidated entities decreased $1.8 million, or 91.8%, to $158,000 in the
2020 period compared to the 2019 period. The 2020 period included equity in loss
of $158,000 from OpenKey. The 2019 period included equity in loss of $1.7
million from Ashford Inc. and $216,000 from OpenKey.
Interest Income. Interest income was $652,000 and $1.6 million for the 2020
period and the 2019 period, respectively.

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Other Income (Expense). Other expense increased $973,000, or 148.8%, to $1.6
million in the 2020 period compared to the 2019 period. In the 2020 period, we
recorded expense of $540,000 from CMBX premiums and interest paid on collateral,
a realized loss of $3.2 million on interest rate floors and other expense of
$2,000. These expenses were partially offset by a realized gain of $2.1 million
on sale of marketable securities and dividend income of $31,000. In
the 2019 period, we recorded other expense of $537,000 related to CMBX premiums
and interest paid on collateral and a realized loss of $388,000 on interest rate
floors. These expenses were partially offset by dividend income of $121,000,
other income of $134,000 and realized gain on marketable securities of $16,000.
Interest Expense and Amortization of Loan Costs. Interest expense and
amortization of loan costs increased $11.0 million, or 8.2%, to $145.2 million
in the 2020 period compared to the 2019 period. The increase is primarily due to
$2.5 million from our Hotel Acquisitions and accruals for additional default
interest and late payment charges totaling $43.6 million. These increases were
partially offset by decreases of $33.3 million at our comparable hotel
properties due to lower LIBOR rates and lower interest expense and amortization
of loan costs of $1.8 million from our Hotel Dispositions. The average LIBOR
rates in the 2020 period and the 2019 period were 0.89% and 2.47%, respectively.
Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan
costs and exit fees decreased $122,000 to $2.0 million in the 2020 period
compared to the 2019 period. In the 2020 period, we executed several amendments
with various lenders, which included deferral of debt service payments and
allowed the use of reserves for property-level operating shortfalls and/or to
cover debt service payments. Third-party fees incurred in conjunction with these
amendments were $336,000 and fees paid to Lismore were $1.6 million, totaling
$1.9 million. We also wrote-off unamortized loan costs of $47,000 and incurred
other costs of $48,000 as a result of a loan refinance. In the 2019 period, we
wrote off $2.1 million of loan costs related to a refinanced mortgage loan and
incurred other costs of $90,000.
Unrealized Gain (Loss) on Marketable Securities. We recorded a $998,000
unrealized loss on marketable securities in the 2020 period and a $1.4 million
unrealized gain on marketable securities in the 2019 period, which are based on
changes in closing market prices during the period.
Unrealized Gain (Loss) on Derivatives. Unrealized loss on derivatives changed
$6.1 million from an unrealized loss of $1.5 million in the 2019 period to an
unrealized gain of $4.6 million in the 2020 period. In the 2020 period, we
recognized unrealized gains of $696,000 related to CMBX tranches, $4.0 million
from interest rate floors of which $3.2 million is associated with the
recognition of realized losses from the expiration of interest rate floors,
partially offset by an unrealized loss of $70,000 associated with interest rate
caps. In the 2019 period, we recognized an unrealized loss of $2.7 million from
CMBX tranches and $1.1 million associated with interest rate caps, partially
offset by unrealized gains of $1.9 million from interest rate floors and
$388,000 associated with the recognition of realized losses from the expiration
of interest rate floors. The fair value of interest rate floors and interest
rate caps are primarily based on movements in the LIBOR forward curve and the
passage of time. The fair value of credit default swaps is based on the change
in value of CMBX indices.
Income Tax (Expense) Benefit. Income tax (expense) benefit changed $5.2
million, from income tax expense of $3.3 million in the 2019 period to an income
tax benefit of $1.9 million in the 2020 period. This change was primarily due to
a decrease in the profitability of our TRS entities in the 2020 period compared
to the 2019 period.
(Income) Loss from Consolidated Entities Attributable to Noncontrolling
Interests. Our noncontrolling interest partner in consolidated entities were
allocated losses of $168,000 and $12,000 in the 2020 and 2019 periods,
respectively.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in
Operating Partnership. Noncontrolling interests in operating partnership were
allocated net losses of $55.0 million and $13.7 million in the 2020 and 2019
periods, respectively. Redeemable noncontrolling interests represented ownership
interests of 14.79% and 15.88% in the operating partnership at June 30, 2020 and
2019, respectively.
LIQUIDITY AND CAPITAL RESOURCES
COVID-19, Management's Plans and Liquidity
In December 2019, COVID-19 was identified in Wuhan, China, which subsequently
spread to other regions of the world, and has resulted in significant travel
restrictions and extended shutdown of numerous businesses in every state in the
United States. In March 2020, the World Health Organization declared COVID-19 to
be a global pandemic. Since late February 2020, we have experienced a
significant decline in occupancy and RevPAR and we expect the significant
occupancy and RevPAR declines associated with COVID-19 to continue as we are
experiencing significant reservation cancellations as well as a significant
reduction in new reservations. The prolonged presence of the virus has resulted
in health and other government authorities imposing widespread restrictions on
travel and other businesses. The hotel industry and our portfolio have
experienced the postponement or cancellation of a significant number of business
conferences and similar events. Following the government mandates and health

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official orders, in March 2020, the Company temporarily suspended operations at
23 of its 116 hotels and dramatically reduced staffing and expenses at its
hotels that remain operational. As of June 30, 2020 operations at five of the
Company's hotels remain temporarily suspended. COVID-19 has had a significant
negative impact on the Company's operations and financial results to date. The
full financial impact of the reduction in hotel demand caused by the pandemic
and suspension of operations at the Company's hotels cannot be reasonably
estimated at this time due to uncertainty as to its severity and duration. The
Company expects that the COVID-19 pandemic will have a significant negative
impact on the Company's results of operations, financial position and cash flow
for at least the remainder of 2020 and into 2021. As a result, the Company
suspended the quarterly cash dividend on its common shares for the first and
second quarters of 2020 and likely for all of 2020, suspended quarterly cash
dividend on its preferred stock for the second quarter, reduced planned capital
expenditures, and working closely with its hotel managers, significantly reduced
its hotels' operating expenses. The Company's advisor adopted a remote-work
policy at its corporate office in an effort to protect the health and safety of
its employees and does not anticipate these policies to have any adverse impact
on its ability to continue to operate its business.
Beginning on April 1, 2020, we did not make principal or interest payments under
nearly all of our loans, which constituted an "Event of Default" as such term is
defined under the applicable loan documents. Pursuant to the terms of the
applicable loan documents, such an Event of Default caused an automatic increase
in the interest rate on our outstanding loan balance for the period such Event
of Default remains outstanding. Following an Event of Default, our lenders can
generally elect to accelerate all principal and accrued interest payments that
remain outstanding under the applicable loan agreement and foreclose on the
applicable hotel properties that are security for such loans. The lenders who
hold the mortgage note secured by the Embassy Suites New York Manhattan Times
Square ($145.0 million mortgage loan) and the mortgage note secured by the
Hilton Scotts Valley hotel in Santa Cruz, California ($24.8 million mortgage
loan) have each sent us an acceleration notice which accelerated all payments
due under the applicable loan documents. In addition, the lender for the W Hotel
in Minneapolis, Minnesota ($51.6 million mortgage loan), the lender for our
Rockbridge Portfolio ($144.2 million mortgage loan), which is an eight hotel
portfolio, and the lender for the portfolio consisting of the Courtyard by
Marriott in Fort Lauderdale, Florida, Courtyard by Marriott in Louisville,
Kentucky and Marriott Residence Inn in Lake Buena Vista, Florida ($64.0 million
mortgage loan), have each sent to us a notice of UCC sale, which provides that
the respective lender will sell the subsidiaries of the Company that own the
respective hotels in a public auction. The Company is in the process of
negotiating forbearance agreements with its lenders. At this time, forbearance
agreements have been executed on some, but not all of our loans. On July 16,
2020, we reached a forbearance agreement with our lenders for the Highland Pool
loan, which is a $907.0 million loan secured by nineteen of our hotels. The
forbearance agreement allows the Company to defer interest payments for six
months in exchange for the Company's agreement to a repayment schedule of the
deferred interest payments. In the aggregate, including the Highland Pool loan,
we have entered into forbearance and other agreements with varying terms and
conditions that conditionally waive or defer payment defaults for loans with a
total outstanding principal balance of approximately $1.1 billion out of
approximately $4.1 billion in property level debt outstanding as of June 30,
2020. Additionally, certain of the Company's hotel properties are subject to
ground leases rather than a fee simple interest, with respect to all or a
portion of the real property at those hotels. It is possible the Company will
default on some or all of the ground leases within the next twelve months.
As of June 30, 2020, the Company held cash and cash equivalents of $165.5
million and restricted cash of $95.3 million. During the three months ended June
30, 2020, we utilized cash, cash equivalents and restricted cash of $106.2
million. We are currently experiencing significant variability in the operating
cash flows of our hotel properties, and we continue to negotiate forbearance
agreements with our lenders. Additionally as discussed above we have received
various acceleration notices and UCC sale notices from our lenders. We are also
taking several steps to reduce our cash utilization and potentially raise
additional capital. All of these items create uncertainty surrounding future
cash flows. As a result of these uncertainties, management cannot reasonably
estimate how long the Company's current cash, cash equivalents and restricted
cash will last, but if our cash utilization going forward is consistent with the
second quarter of 2020 and we do not raise additional capital, it is possible
that the Company may utilize all of its cash, cash equivalents and restricted
cash within the next twelve months.
Based on these factors, the Company has determined that there is substantial
doubt about the Company's ability to continue as a going concern within one year
after the date the financial statements are issued. U.S. generally accepted
accounting principles require that in making this determination, the Company
cannot consider any remedies that are outside of the Company's control and have
not been fully implemented. As a result, the Company could not consider future
potential fundraising activities, whether through equity or debt offerings,
dispositions of hotel properties or the likelihood of obtaining forbearance
agreements as we could not conclude they were probable of being effectively
implemented. Any forbearance agreements will most likely lead to increased
costs, increased interest rates, additional restrictive covenants and other
possible lender protections. In addition to or in lieu of obtaining forbearance
agreements as described above, the Company could transfer the hotels securing
the mortgage loans to the respective lenders.

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The spread of COVID-19 and the recent developments surrounding the global
pandemic are having significant negative impacts on our business. In response to
the impact of COVID-19 on the hospitality industry, the Company is deploying
numerous strategies and protocols to provide financial flexibility going forward
to navigate this crisis, including:
•      as of July 31, 2020, the Company has temporarily suspended operations at
       four hotel properties. The Company's remaining 112 hotel properties are
       open and operating;

• the Company has significantly reduced its planned spending for capital

expenditures for the fiscal year to a range of $30-$50 million;

• the Company has suspended its common dividend conserving approximately $7


       million per quarter;


•      the Company has suspended its preferred stock dividends conserving
       approximately $10.6 million per quarter;


•      the Company has taken proactive and aggressive actions to protect
       liquidity and reduce corporate expenses through the curtailment of all
       non-essential expenses resulting in an approximate 25% reduction in
       corporate, general and administrative and reimbursable expenses and will

continue to take all necessary additional actions to preserve capital and

liquidity;

• the Company ended the quarter with cash and cash equivalents of $165.5


       million and restricted cash of $95.3 million. The vast majority of the
       restricted cash is comprised of lender and manager held reserves. The
       Company is currently working with its property managers and lenders in
       order to utilize lender and manager held reserves to fund operating

shortfalls. At the end of the quarter, there was also $12.9 million due to

the Company from third-party hotel managers, which is the Company's cash

held by one of its property managers which is also available to fund hotel

operating costs; and

• the Company has partnered with local government agencies, medical staffing

organizations, and hotel brands to support COVID-19 response efforts. To

date, through various initiatives, 86 Ashford Trust hotels have provided


       temporary lodging for first responders, health care professionals, and
       other community residents impacted by the pandemic.


Our cash position from operations is affected primarily by macro industry
movements in occupancy and rate as well as our ability to control costs.
Further, interest rates can greatly affect the cost of our debt service as well
as the value of any financial hedges we may put in place. We monitor industry
fundamentals and interest rates very closely. Capital expenditures above our
reserves will affect cash flow as well.
Certain of our loan agreements contain cash trap provisions that may get
triggered if the performance of our hotels decline. When these provisions are
triggered, substantially all of the profit generated by our hotels is deposited
directly into lockbox accounts and then swept into cash management accounts for
the benefit of our various lenders. These cash trap provisions have been
triggered on nearly all of our mortgage loans containing cash trap provisions.
We have entered into certain customary guaranty agreements pursuant to which we
guaranty payment of any recourse liabilities of our subsidiaries or joint
ventures that may result from non-recourse carve-outs, which include, but are
not limited to fraud, misrepresentation, willful misconduct resulting in waste,
misappropriations of rents following an event of default, voluntary bankruptcy
filings, unpermitted transfers of collateral, delinquency of trade payables and
certain environmental liabilities. Certain of these guarantees represent a
guaranty of material amounts, and if we are required to make payments under
those guarantees, our liquidity could be adversely affected.
Pursuant to the advisory agreement between us and our advisor, we must pay our
advisor on a monthly basis a base management fee, subject to a minimum base
management fee. The minimum base management fee is equal to the greater of: (i)
90% of the base fee paid for the same month in the prior fiscal year; and (ii)
1/12th of the "G&A Ratio" for the most recently completed fiscal quarter
multiplied by our total market capitalization on the last balance sheet date
included in the most recent quarterly report on Form 10-Q or annual report on
Form 10-K that we file with the SEC. Thus, even if our total market
capitalization and performance decline, we will still be required to make
payments to our advisor equal to the minimum base management fee, which could
adversely impact our liquidity and financial condition.
On December 5, 2017, the board of directors reapproved a stock repurchase
program (the "Repurchase Program") pursuant to which the board of directors
granted a repurchase authorization to acquire shares of the Company's common
stock, par value $0.01 per share having an aggregate value of up to $200
million. The board of directors' authorization replaced any previous repurchase
authorizations. No shares were repurchased during the three and six months ended
June 30, 2020 pursuant to the Repurchase Program.
On December 11, 2017, we entered into equity distribution agreements with
certain sales agents to sell from time to time shares of our common stock having
an aggregate offering price of up to $100.0 million. Sales of shares of our
common stock, if any, may be made in negotiated transactions or transactions
that are deemed to be "at-the-market" offerings as defined in Rule 415 of the
Securities Act, including sales made directly on the NYSE, the existing trading
market for our common stock, or sales

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made to or through a market maker other than on an exchange or through an
electronic communications network. We will pay each of the sales agents a
commission, which in each case shall not be more than 2.0% of the gross sales
price of the shares of our common stock sold through such sales agent. No shares
were issued during the three and six months ended June 30, 2020. As of June 30,
2020, we have issued approximately 2.4 million shares of our common stock for
gross proceeds of approximately $15.5 million leaving approximately $84.5
million available under the program.
On January 9, 2020, we refinanced our $43.8 million mortgage loan, secured by
the Le Pavillon in New Orleans, Louisiana. In connection with the refinance we
reduced the loan amount by $6.8 million. The new mortgage loan totals $37.0
million. The new mortgage loan is interest only and provides for an interest
rate of LIBOR + 3.40%. The stated maturity is January 2023 with two one-year
extension options, subject to the satisfaction of certain conditions. The
mortgage loan is secured by the Le Pavillon.
On July 20, 2020, the Company filed the Form S-4. The Company is offering to
exchange any and all of the outstanding shares of the following series of its
preferred stock (8.45% Series D Cumulative Preferred Stock, 7.375% Series F
Cumulative Preferred Stock, 7.375% Series G Cumulative Preferred Stock, 7.50%
Series H Cumulative Preferred Stock and 7.50% Series I Cumulative Preferred
Stock) for, at the election of each holder, consideration in the form of cash or
shares of Company common stock.
Sources and Uses of Cash
Our principal sources of funds to meet our cash requirements include: cash on
hand, cash flow from operations, capital market activities, property refinancing
proceeds and asset sales. Additionally, our principal uses of funds are expected
to include possible operating shortfalls, owner-funded capital expenditures,
dividends, new investments, and debt interest and principal payments. Items that
impacted our cash flow and liquidity during the periods indicated are summarized
as follows:
Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows
provided by (used in) operating activities, pursuant to our consolidated
statements of cash flows, which includes changes in balance sheet items, were
$(64.8) million and $92.3 million for the six months ended June 30, 2020 and
2019, respectively. Cash flows provided by/used in operations were impacted by
the COVID-19 pandemic, changes in hotel operations, our hotel acquisitions in
2019, our hotel dispositions in 2019 and 2020 as well as the timing of
collecting receivables from hotel guests, paying vendors, settling with
derivative counterparties, settling with related parties and settling with hotel
managers.
Net Cash Flows Provided by (Used in) Investing Activities. For the six months
ended June 30, 2020, net cash flows used in investing activities were $25.0
million. Cash outflows primarily consisted of $29.8 million for capital
improvements made to various hotel properties, partially offset by cash inflows
of $4.7 million from proceeds received from the sale of the Crowne Plaza
Annapolis.
For the six months ended June 30, 2019, net cash flows used in investing
activities were $277.8 million. Cash outflows primarily consisted of $81.5
million for capital improvements made to various hotel properties and $213.1
million primarily for the acquisitions of the Hilton Santa Cruz/Scotts Valley
and Embassy Suites New York Manhattan Times Square. Cash outflows were partially
offset by $13.1 million from proceeds received from the sale of FF&E for ERFP
and $4.0 million of proceeds from a franchise agreement extension.
Net Cash Flows Provided by (Used in) Financing Activities. For the six months
ended June 30, 2020, net cash flows used in financing activities were $47.7
million. Cash outflows were $96.3 million for repayments of indebtedness, $28.6
million for dividend payments to common and preferred stockholders and
unitholders and $10.3 million for payments of loan costs and exit fees,
partially offset by cash inflows of $88.0 million from borrowings on
indebtedness.
For the six months ended June 30, 2019, net cash flows provided by financing
activities were $146.2 million. Cash inflows primarily consisted of $388.7
million of borrowings on indebtedness. Cash inflows were partially offset by
cash outflows of $181.2 million for repayments of indebtedness, $50.3 million
for dividend payments to common and preferred stockholders and unitholders, $9.1
million for payments of loan costs and exit fees, $906,000 for the repurchase of
common stock and $1.0 million of payments for derivatives.
We are required to maintain certain financial ratios under various debt and
derivative agreements. If we violate covenants in any debt or derivative
agreement, we could be required to repay all or a portion of our indebtedness
before maturity at a time when we might be unable to arrange financing for such
repayment on attractive terms, if at all. Beginning on April 1, 2020, we did not
make principal or interest payments under nearly all of our loans, which
constituted an "Event of Default" as such term is defined under the applicable
loan documents. Pursuant to the terms of the applicable loan documents, such an
Event of Default caused an automatic increase in the interest rate on our
outstanding loan balance for the period such Event of Default remains
outstanding. Following an Event of Default, our lenders can generally elect to
accelerate all principal and accrued interest payments that remain outstanding
under the applicable loan agreement and foreclose on the applicable hotel
properties that are security for such loans. The lenders who hold the mortgage
note secured by the Embassy Suites New York Manhattan Times Square ($145.0
million

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mortgage loan) and the mortgage note secured by the Hilton Scotts Valley hotel
in Santa Cruz, California ($24.8 million mortgage loan) have each sent us an
acceleration notice which accelerated all payments due under the applicable loan
documents. In addition, the lender for the W Hotel in Minneapolis, Minnesota
($51.6 million mortgage loan), the lender for our Rockbridge Portfolio ($144.2
million mortgage loan), which is an eight hotel portfolio, and the lender for
the portfolio consisting of the Courtyard by Marriott in Fort Lauderdale,
Florida, Courtyard by Marriott in Louisville, Kentucky and Marriott Residence
Inn in Lake Buena Vista, Florida ($64.0 million mortgage loan), have each sent
to us a notice of UCC sale, which provides that the respective lender will sell
the subsidiaries of the Company that own the respective hotels in a public
auction. The Company is in the process of negotiating forbearance agreements
with its lenders. At this time, forbearance agreements have been executed on
some, but not all of our loans. On July 16, 2020, we reached a forbearance
agreement with our lenders for the Highland Pool loan, which is a $907.0 million
loan secured by nineteen of our hotels. The forbearance agreement allows the
Company to defer interest payments for six months in exchange for the Company's
agreement to a repayment schedule of the deferred interest payments. In the
aggregate, including the Highland Pool loan, we have entered into forbearance
and other agreements with varying terms and conditions that conditionally waive
or defer payment defaults for loans with a total outstanding principal balance
of $1.1 billion out of $4.1 billion in property level debt outstanding as of
June 30, 2020.
In addition, the senior lenders and mezzanine lenders who hold notes secured by
the Embassy Suites New York Manhattan Times Square are parties to a guaranty
with a third party, which guaranty the mezzanine lenders can call upon to make
payment of up to $20 million now that the mezzanine loans have been accelerated.
As of June 30, 2020, the principal and accrued interest amount of the notes
currently held by the senior lenders, senior mezzanine lenders and junior
mezzanine lenders is approximately $111.7 million, $27.4 million and $10.5
million, respectively. If the lenders call upon the guaranty, and the third
party guarantor makes payments under the guaranty, the guarantor has the right
to require us to reimburse them for the amount paid under the guaranty. If we do
not reimburse the guarantor, the guarantor will have the option to purchase the
equity in the entity which owns the Embassy Suites New York Manhattan Times
Square hotel for $1.
Mortgage and mezzanine loans are nonrecourse to the borrowers, except for
customary exceptions or carve-outs that trigger recourse liability to the
borrowers in certain limited instances. Recourse obligations typically include
only the payment of costs and liabilities suffered by lenders as a result of the
occurrence of certain bad acts on the part of the borrower. However, in certain
cases, carve-outs could trigger recourse obligations on the part of the borrower
with respect to repayment of all or a portion of the outstanding principal
amount of the loans. We have entered into customary guaranty agreements pursuant
to which we guaranty payment of any recourse liabilities of the borrowers that
result from non-recourse carve-outs (which include, but are not limited to,
fraud, misrepresentation, willful conduct resulting in waste, misappropriations
of rents following an event of default, voluntary bankruptcy filings,
unpermitted transfers of collateral, and certain environmental liabilities). In
the opinion of management, none of these guaranty agreements, either
individually or in the aggregate, are likely to have a material adverse effect
on our business, results of operations, or financial condition.
Based on our current level of operations, we do not expect that our cash flow
from operations and our existing cash balances will be adequate to meet upcoming
anticipated requirements for interest and principal payments on debt (excluding
any potential final maturity payments), working capital, and capital
expenditures for the next 12 months and dividends required to maintain our
status as a REIT for U.S. federal income tax purposes. With respect to upcoming
maturities, no assurances can be given that we will be able to refinance our
2020 final debt maturities. Additionally, no assurances can be given that we
will obtain additional financings or, if we do, what the amount and terms will
be. Our failure to obtain future financing under favorable terms could adversely
impact our ability to execute our business strategy or may result in lender
foreclosure.
We are committed to an investment strategy where we will pursue hotel-related
investments as suitable situations arise. Funds for future hotel-related
investments are expected to be derived, in whole or in part, from cash on hand,
future borrowings under a credit facility or other loans, or proceeds from
additional issuances of common stock, preferred stock, or other securities,
asset sales, and joint ventures. However, we have no formal commitment or
understanding to invest in additional assets, and there can be no assurance that
we will successfully make additional investments. We may, when conditions are
suitable, consider additional capital raising opportunities.
Our existing hotel properties are mostly located in developed areas with
competing hotel properties. Future occupancy, ADR, and RevPAR of any individual
hotel could be materially and adversely affected by an increase in the number or
quality of competitive hotel properties, home sharing companies or apartment
operators offering short-term rentals in its market area. Competition could also
affect the quality and quantity of future investment opportunities.
Dividend Policy. In December 2019, the board of directors approved our 2020
dividend policy which stated our then-expectation to pay a quarterly dividend
payment of $0.06 per share for 2020. As previously disclosed, the approval of
our dividend policy did not commit our board of directors to declare future
dividends. On March 16, 2020, the Company and its board of directors announced a
suspension of its previously disclosed 2020 common stock dividend policy. The
Company did not pay a dividend on its common stock for the first and second
quarters ended March 31, 2020 and June 30, 2020 and does not currently expect to
pay dividends

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on its common stock for the foreseeable future. The board of directors will
continue to review our dividend policy and make future announcements with
respect thereto. We may incur indebtedness to meet distribution requirements
imposed on REITs under the Code to the extent that working capital and cash flow
from our investments are insufficient to fund required distributions.
Alternatively, we may elect to pay dividends on our common stock in cash or a
combination of cash and shares of securities as permitted under U.S. federal
income tax laws governing REIT distribution requirements. We may pay dividends
in excess of our cash flow.
SEASONALITY
Our properties' operations historically have been seasonal as certain properties
maintain higher occupancy rates during the summer months, while certain other
properties maintain higher occupancy rates during the winter months. This
seasonality pattern can cause fluctuations in our quarterly lease revenue under
our percentage leases. Quarterly revenue also may be adversely affected by
renovations and repositionings, our managers' effectiveness in generating
business and by events beyond our control, such as the COVID-19 pandemic and
government-issued travel restrictions in response, extreme weather conditions,
natural disasters, terrorist attacks or alerts, civil unrest, government
shutdowns, airline strikes or reduced airline capacity, economic factors and
other considerations affecting travel. To the extent that cash flows from
operations are insufficient during any quarter to enable us to make quarterly
distributions to maintain our REIT status due to temporary or seasonal
fluctuations in lease revenue, we expect to utilize cash on hand, borrowings and
common stock to fund required distributions. However, we cannot make any
assurances that we will make distributions in the future.
OFF-BALANCE SHEET ARRANGEMENTS
In the normal course of business, we form partnerships or joint ventures that
operate certain hotels. We evaluate each partnership and joint venture to
determine whether the entity is a VIE. If the entity is determined to be a VIE,
we assess whether we are the primary beneficiary and need to consolidate the
entity. For further discussion of the company's VIEs, see note 2 to our
consolidated financial statements.
CONTRACTUAL OBLIGATIONS
Beginning April 1, 2020 we did not make principal or interest payments under
nearly all of our mortgage loans, which constituted an "Event of Default" as
such term is defined under the applicable loan documents. The lenders who hold
the mortgage note secured by the Embassy Suites New York Manhattan Times Square
($145.0 million mortgage loan) and the mortgage note secured by the Hilton
Scotts Valley hotel in Santa Cruz, California ($24.8 million mortgage loan) have
each sent us an acceleration notice which accelerated all payments due under the
applicable loan documents. In addition, the lender for the W Hotel in
Minneapolis, Minnesota ($51.6 million mortgage loan), the lender for our
Rockbridge Portfolio ($144.2 million mortgage loan), which is an eight hotel
portfolio, and the lender for the portfolio consisting of the Courtyard by
Marriott in Fort Lauderdale, Florida, Courtyard by Marriott in Louisville,
Kentucky and Marriott Residence Inn in Lake Buena Vista, Florida ($64.0 million
mortgage loan), have each sent to us a notice of UCC sale, which provides that
the respective lender will sell the subsidiaries of the Company that own the
respective hotels in a public auction. The Company is in the process of
negotiating forbearance agreements with its lenders. At this time, forbearance
agreements have been executed on some, but not all of our loans. As of July 31,
2020, we have entered into forbearance and other agreements with varying terms
and conditions that conditionally waive or defer payment defaults for loans with
a total outstanding principal balance of approximately $1.1 billion out of
approximately $4.1 billion in property level debt outstanding as of June 30,
2020.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our consolidated financial statements in accordance with
accounting principles generally accepted in the United States requires us to
make estimates and assumptions that affect the reported amounts of assets and
liabilities and disclosure of contingent assets and liabilities at the date of
the financial statements and the reported amounts of revenue and expenses during
the reporting period. Actual results could differ from those estimates. Our
accounting policies that are critical or most important to understanding our
financial condition and results of operations and that require management to
make the most difficult judgments are described in our 2019 Form 10-K. There
have been no material changes in these critical accounting policies.
NON-GAAP FINANCIAL MEASURES
The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre,
Funds From Operations ("FFO") and Adjusted FFO are presented to help our
investors evaluate our operating performance.

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EBITDA is defined as net income (loss) before interest expense and amortization
of premiums and loan costs, net, income taxes, depreciation and amortization,
equity in earnings/loss of unconsolidated entities and after the Company's
portion of EBITDA of unconsolidated entities. In addition, we exclude impairment
charges on real estate, and gain/loss on sale of hotel properties of
unconsolidated entities to calculate EBITDAre, as defined by NAREIT.
We then further adjust EBITDAre to exclude certain additional items such as
gain/loss on insurance settlements, write-off of premiums, loan costs and exit
fees, other income/expense, net, transaction and conversion costs, legal,
advisory and settlement costs, dead deal costs, advisory services incentive fees
and non-cash items such as amortization of unfavorable contract liabilities,
non-cash stock/unit-based compensation, unrealized gains/losses on marketable
securities and derivative instruments, as well as our portion of adjustments to
EBITDAre of unconsolidated entities.
We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they
reflect more accurately the ongoing performance of our hotel assets and other
investments and provide more useful information to investors as they are
indicators of our ability to meet our future debt payment requirements, working
capital requirements and they provide an overall evaluation of our financial
condition. EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be
comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies
that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define
the terms. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash
generated from operating activities determined in accordance with GAAP, and
should not be considered as an alternative to operating income or net income
determined in accordance with GAAP as an indicator of performance or as an
alternative to cash flows from operating activities as determined by GAAP as an
indicator of liquidity.
The following table reconciles net income (loss) to EBITDA, EBITDAre and
Adjusted EBITDAre (in thousands):
                                             Three Months Ended June 30,

Six Months Ended June 30,


                                                2020               2019             2020             2019
Net income (loss)                         $     (242,086 )     $  (21,352 )   $    (344,006 )     $ (67,974 )
Interest expense and amortization of
premiums and loan costs, net                      88,082           67,987           145,167         134,153
Depreciation and amortization                     65,016           67,511           131,366         134,689
Income tax expense (benefit)                      (2,188 )          3,706            (1,885 )         3,301
Equity in (earnings) loss of
unconsolidated entities                               79              867               158           1,930
Company's portion of EBITDA of
unconsolidated entities (Ashford Inc.)                 -            1,703                 -           3,577
Company's portion of EBITDA of
unconsolidated entities (OpenKey)                    (78 )            (94 )            (156 )          (209 )
EBITDA                                           (91,175 )        120,328           (69,356 )       209,467
Impairment charges on real estate                 27,605            6,533            55,218           6,533
(Gain) loss on sale of assets and hotel
properties                                             6             (328 )          (3,617 )          (561 )
EBITDAre                                         (63,564 )        126,533           (17,755 )       215,439
Amortization of unfavorable contract
liabilities                                           59              117               108              78
(Gain) loss on insurance settlements                (148 )              -              (148 )           (36 )
Write-off of premiums, loan costs and
exit fees                                          1,935               90             2,030           2,152
Other (income) expense, net                        3,150              413             1,659             775
Transaction and conversion costs                   1,794              240             2,535             686
Legal, advisory and settlement costs                  40            1,399               185           1,816
Unrealized (gain) loss on marketable
securities                                          (479 )           (598 )             998          (1,406 )
Unrealized (gain) loss on derivatives               (192 )         (1,476 )          (4,614 )         1,518
Dead deal costs                                       16               18               117              50
Non-cash stock/unit-based compensation               841            5,368             5,747           9,958
Advisory services incentive fee                        -             (636 )               -               -
Company's portion of adjustments to
EBITDAre of unconsolidated entities
(Ashford Inc.)                                         -              618                 -           1,531
Company's portion of adjustments to
EBITDAre of unconsolidated entities
(OpenKey)                                              3               14                 9              35
Adjusted EBITDAre                         $      (56,545 )     $  132,100     $      (9,129 )     $ 232,596



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We calculate FFO and Adjusted FFO in the following table. FFO is calculated on
the basis defined by NAREIT, which is net income (loss) attributable to common
stockholders, computed in accordance with GAAP, excluding gains or losses on
sale of assets and hotel properties, plus depreciation and amortization of real
estate assets, impairment charges on real estate assets, and after adjustments
for unconsolidated entities and noncontrolling interests in the operating
partnership. Adjustments for unconsolidated entities are calculated to reflect
FFO on the same basis. NAREIT developed FFO as a relative measure of performance
of an equity REIT to recognize that income-producing real estate historically
has not depreciated on the basis determined by GAAP. Our calculation of Adjusted
FFO excludes write-off of premiums, loan costs and exit fees, gain/loss on
insurance settlements, other income/expense, net transaction and conversion
costs, legal, advisory, and settlement costs, dead deal costs, advisory service
incentive fees and non-cash items such as non-cash stock/unit-based
compensation, amortization of loan costs, unrealized gains/losses on marketable
securities and derivative instruments, as well as our portion of adjustments to
FFO related to unconsolidated entities. We exclude items from Adjusted FFO that
are either non-cash or are not part of our core operations in order to provide a
period-over-period comparison of our operating results. We consider FFO and
Adjusted FFO to be appropriate measures of our ongoing normalized operating
performance as a REIT. We compute FFO in accordance with our interpretation of
standards established by NAREIT, which may not be comparable to FFO reported by
other REITs that either do not define the term in accordance with the current
NAREIT definition or interpret the NAREIT definition differently than us. FFO
and Adjusted FFO do not represent cash generated from operating activities as
determined by GAAP and should not be considered as an alternative to a) GAAP net
income or loss as an indication of our financial performance or b) GAAP cash
flows from operating activities as a measure of our liquidity, nor is it
indicative of funds available to satisfy our cash needs, including our ability
to make cash distributions. However, to facilitate a clear understanding of our
historical operating results, we believe that FFO and Adjusted FFO should be
considered along with our net income or loss and cash flows reported in the
consolidated financial statements.
The following table reconciles net income (loss) to FFO and Adjusted FFO (in
thousands):

Latest news about Ashford Hospitality Trust, Inc.

Ashford Hospitality Trust Appoints Stephen Zsigray as CEO	Apr. 18	MT
Blackwells Capital Files Preliminary Proxy Statement with Securities and Exchange Commission	Apr. 09	CI
Lodging REIT Quarterly Results Likely Benefitted From Upper Upscale Chain Strength, Oppenheimer Says	Apr. 05	MT
Ashford Hospitality Trust Closes $19.2 Million Sale; CEO Says More Disposals in Pipeline	Mar. 11	MT
A unknown buyer completed the acquisition of 144-room Residence Inn located in Salt Lake City from Ashford Hospitality Trust, Inc..	Mar. 10	CI
Transcript : Ashford Hospitality Trust, Inc., Q4 2023 Earnings Call, Feb 29, 2024	Feb. 29
Ashford Hospitality Trust, Inc. Reports Earnings Results for the Fourth Quarter and Full Year Ended December 31, 2023	Feb. 28	CI
A unknown buyer agreed to acquire 144-room Residence Inn located in Salt Lake City from Ashford Hospitality Trust, Inc. for $19.2 million.	Feb. 15	CI
Ashford Hospitality Trust, Inc. Provides Earnings Guidance for the Fourth Quarter and Full Year Ended December 31, 2023	Feb. 15	CI
Sector Update: Financial Stocks Softer Late Afternoon	Jan. 31	MT
Sector Update: Financial	Jan. 31	MT
Ashford Hospitality Trust Updates Plan to Pay Off Strategic Financing; Shares Jump	Jan. 31	MT
Ashford Hospitality Trust Plans to Sell Hotels	Jan. 30	CI
Ashford Hospitality Trust, Inc. Provides Operating Guidance for Fourth Quarter of 2023	Jan. 09	CI
Ashford Hospitality Trust, Inc. Announces Operating Results for Month of October, November and December 2023	Jan. 09	CI
Ashford Hospitality Trust, Inc. Announces Executive Changes	Dec. 07	CI
B. Riley Trims Ashford Hospitality's PT to $2.50 From $3, Reduces Estimates on Model Adjustments Related to Asset Handbacks, Interest Expense; Keeps Neutral Rating	Nov. 22	MT
ANZ Hospitality LLC completed the acquisition of Sheraton (Bucks County, PA) from Ashford Hospitality Trust, Inc. for $13.8 million.	Nov. 08	CI
Tranche Update on Ashford Hospitality Trust, Inc.'s Equity Buyback Plan announced on May 6, 2022.	Nov. 08	CI
Transcript : Ashford Hospitality Trust, Inc., Q3 2023 Earnings Call, Nov 08, 2023	Nov. 08
Ashford Hospitality Trust, Inc. Reports Earnings Results for the Third Quarter and Nine Months Ended September 30, 2023	Nov. 07	CI
Ashford Hospitality Trust, Inc. Provides Production Guidance for the Third Quarter of 2023	Nov. 01	CI
ANZ Hospitality LLC agreed to acquire Sheraton (Bucks County, PA) from Ashford Hospitality Trust, Inc..	23-10-02	CI
B. Riley Trims Ashford Hospitality Trust's PT to $3 From $5.50, Notes Sale of 1 Asset in Florida, Plan to Hand Back 19 Hotels to Lenders; Keeps Neutral Rating	23-08-22	MT
Ashford Hospitality Says Crowne Plaza La Concha Hotel Conversion on Track	23-08-21	MT

Chart Ashford Hospitality Trust, Inc.

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Ashford Hospitality Trust, Inc. is a real estate investment trust (REIT). The Company's portfolio consists of upscale hotels and upper upscale full-service hotels. The Company owns its lodging investments and conducts its business through Ashford Hospitality Limited Partnership (Ashford Trust OP). The Company's hotel properties are primarily branded under the brands of Hilton, Hyatt, Marriott and Intercontinental Hotel Group. The Company operates through one segment: direct hotel investments. The Companyâs portfolio consists of 90 hotels with 20,549 rooms. It owns a 15.1 % ownership in OpenKey, Inc. The Company owns four consolidated operating hotel properties, which represent 405 total rooms owned through a 99.4% ownership interest in Stirling REIT OP, LP (Stirling OP). The Company also has an investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage (the Meritage Investment) in Napa, California.

Sector

Specialized REITs

Calendar

2024-05-06 - Q1 2024 Earnings Release

More about the company

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Ratings for Ashford Hospitality Trust, Inc.

Trading Rating

Investor Rating

ESG Refinitiv

C-

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Analysts' Consensus

Sell

Buy

Mean consensus

OUTPERFORM

Number of Analysts

Last Close Price

1.32 USD

Average target price

3.833 USD

Spread / Average Target

+190.40%

Consensus

EPS Revisions

Estimates Revisions

Quarterly earnings - Rate of surprise

Company calendar

Sector Hospitality REITs

	1st Jan change	Capi.
ASHFORD HOSPITALITY TRUST, INC.	-31.96%	52.42M
VICI PROPERTIES, INC.	-13.68%	28.71B
HOST HOTELS & RESORTS, INC.	-4.52%	13.08B
GAMING AND LEISURE PROPERTIES, INC.	-14.18%	11.5B
RYMAN HOSPITALITY PROPERTIES, INC.	-4.98%	6.19B
APPLE HOSPITALITY REIT, INC.	-10.11%	3.62B
PARK HOTELS & RESORTS INC.	+5.42%	3.4B
JAPAN HOTEL REIT INVESTMENT CORPORATION	+14.16%	2.38B
COVIVIO HOTELS	-9.45%	2.35B
SUNSTONE HOTEL INVESTORS, INC.	-6.24%	2.05B

Hospitality REITs

Ashford Hospitality Trust, Inc.

Equities

AHT

US0441038694

Specialized REITs

ASHFORD HOSPITALITY TRUST : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS (form 10-Q)

Latest news about Ashford Hospitality Trust, Inc.

Chart Ashford Hospitality Trust, Inc.

Company Profile

Income Statement Evolution

Ratings for Ashford Hospitality Trust, Inc.

Analysts' Consensus

EPS Revisions

Quarterly earnings - Rate of surprise

Sector Hospitality REITs