Total revenue increased 157.4% to $104.1 million from $40.4 million
Ashford Hospitality Trust, Inc. (NYSE:AHT) today reported the following results and performance measures for the fourth quarter and year ended December 31, 2005. The performance measurements for Occupancy, ADR, RevPar, and Hotel Operating Profit include the Company's 63 core hotels, which excludes 17 hotel assets held for sale, and compare the fourth quarter and full year ended December 31, 2005 to the fourth quarter and full year ended December 31, 2004. The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.
FINANCIAL HIGHLIGHTS
• Total revenue increased 157.4% to $104.1 million from $40.4 million
• Net loss available to common shareholders was $7.7 million compared with a net loss of $794,000
• Net loss available to common shareholders per share was $0.18 compared with a net loss of $0.03
• Results include debt extinguishment charges and write-off of loan costs totaling $13.4 million, or $0.31 per share, in the fourth quarter
• Adjusted funds from operations (AFFO) increased 404.5% to $17.0 million from $3.4 million
• AFFO per diluted share increased 145.5% to $0.27 from $0.11
• Cash available for distribution (CAD) was $14.5 million, or $0.23 per diluted share
• CAD per share increased by 109.1% for the quarter and 104.7% over the 2004 year
• Declared eighth consecutive increase in quarterly common dividend to $0.20 per share
• Dividend payout ratio was 80.7 % of CAD for the 2005 year
STRONG INTERNAL GROWTH
• Proforma revenue per available room (RevPAR) increased 12.7% for hotels not under renovation on a 9.2% increase in ADR to $107.92 and 224-basis point improvement in occupancy
• Proforma RevPAR increased 9.5% for consolidated hotels on a 9.0% increase in ADR to $107.32 and 33-basis point improvement in occupancy
• Proforma same-property hotel operating profit for hotels not under renovation improved 10.0%
CAPITAL RECYCLING AND ASSET ALLOCATION
• Today, 15 select service hotels remain designated as for sale with closings expected in 2006
• Capex invested in 2005 totals $38 million
• Additional Capex planned for 2006 totals $75 million
EXTERNAL GROWTH
• Total enterprise value improved to $1.5 billion at December 31, 2005
• Acquired the Hyatt Dulles Airport in Herndon, Virginia, for $72.5 million in cash
• Acquired an $18.2 million mezzanine loan on the Four Seasons Nevis in Nevis, West Indies
• Mezzanine and first mortgage loan portfolio totaled $108.3 million at December 31, 2005, with weighted average interest rate of 14.2%
PORTFOLIO REVPAR REFLECTS BENEFIT OF VALUE-ADDED RENOVATIONS
As of December 31, 2005, the Company had a portfolio of direct hotel investments consisting of 80 properties, 63 of which are included in continuing operations. During the fourth quarter, 50 of the hotels included in continuing operations were not under renovation. The Company believes reporting its operating metrics for continuing operations on a proforma consolidated and proforma not-under-renovation basis is a measure that reflects a meaningful and more focused comparison of the operating improvement in its direct hotel portfolio. The Company's reporting by region and brand includes the results of the 63 hotels in continuing operations. Details of each category are provided in the tables attached to this release.
• RevPAR growth by region was led by: Pacific(6 hotels) with a 20.0% increase; West South Central(5) with 10.8%; Mountain(5) with 10.6%; South Atlantic(25) with 10.1%; East South Central(4) with 7.7%; Middle Atlantic(3) with 5.4%; West North Central(2) with 4.4%; East North Central(11) with a 0.2% decrease; and New England(2) with a 16.1% decrease
• RevPAR growth by brand was led by: Hyatt(2 hotels) with a 32.4% increase; InterContinental(2) with 15.3%; Hilton(21) with 11.0%; Marriott(27) with 9.7%; Starwood(2) with 1.9%; independents(2) with a 5.8% decrease; and Radisson(7) with a 8.4% decrease
Monty J. Bennett, President and CEO, commented, "The strong FFO and RevPAR growth for the quarter was a direct result of the continued emphasis on reinvesting in our properties and maximizing the value inherent in these assets. Having previously targeted hotels that were expected to experience above-market RevPAR gains, we designed asset management plans together with our property managers to position each hotel to outperform its market. With double-digit RevPAR growth for hotels not under renovation in every quarter during 2005, the value of this patient strategy has been readily apparent. We intend to continue with this capital improvement plan during 2006 as we recycle capital to new assets that best fit within our long-term core portfolio and build on the operational improvements already underway."
FINANCING ACTIVITY LOWERS BORROWING COSTS WITH FIXED-RATE DEBT
At December 31, 2005, the Company's net debt, defined as total debt less cash, to total enterprise value, defined as net debt plus the market value of all common shares, preferred shares and operating partnership units outstanding was 53.6% based upon the company's closing stock price of $10.49. As of December 31, 2005, the Company's $908.6 million debt portfolio consisted of approximately 87% of fixed-rate debt and approximately 13% of variable-rate debt, with a total weighted average interest rate of 5.59%. The Company's weighted average debt maturity is 8.6 years.
On October 28, 2005, the Company executed a $45.0 million mortgage loan, which is secured by one hotel, at an interest rate of LIBOR plus 2%, matures October 10, 2007, includes three one-year extension options, and requires monthly interest-only payments through maturity. In connection with this loan, the Company purchased a 7.0% LIBOR interest rate cap with a $45.0 million notional amount, which matures October 15, 2007, to limit its exposure to rising interest rates on its variable-rate debt.
On November 14, 2005, the Company executed a $211.5 million mortgage loan, which is secured by 16 hotels divided equally into two pools. The first pool for $110.9 million incurs interest at a fixed rate of 5.75%, matures December 11, 2014, and requires monthly interest-only payments for four years plus monthly principal payments thereafter based on a twenty-five-year amortization schedule. The second pool for $100.6 million incurs interest at a fixed rate of 5.7%, matures December 11, 2015, and requires monthly interest-only payments for five years plus monthly principal payments thereafter based on a twenty-five-year amortization schedule. The Company used proceeds from the loan to repay its $210.0 million term loan, due October 10, 2006, and its $6.2 million mortgage loan, due January 1, 2006.
On December 23, 2005, the Company executed a $100.0 million senior secured revolving credit facility with the ability to be increased to $150.0 million subject to certain conditions, of which drawings thereon will initially be secured by certain mezzanine loans receivable, that will mature December 23, 2008, will incur interest at LIBOR plus a range of 1.5% to 2.75% depending on the loan-to-value ratio and types of collateral pledged, and will require monthly interest-only payments through maturity.
FOURTH QUARTER INVESTMENT ACTIVITY
On October 28, 2005, the Company acquired the Hyatt Dulles Airport in Herndon, Virginia, for approximately $72.5 million in cash. To finance the acquisition, the company obtained a $45 million 2-year loan at LIBOR plus 200 basis points.
On December 16, 2005, the Company acquired a mezzanine loan receivable of approximately $18.2 million on the Four Seasons Nevis in Nevis, West Indies. The loan bears interest at a rate of LIBOR plus 9% and matures in October 2008, with interest-only payments through maturity.
SUBSEQUENT INVESTMENT ACTIVITY
On January 17, 2006, the Company sold two Howard Johnson hotels located in Commack, New York, and Westbury, New York, for approximately $11.0 million, or approximately $10.3 million net of closing costs. These two hotels were originally acquired by the Company on March 16, 2005, in connection with its acquisition of a 21-property hotel portfolio, and are the last to be sold of the eight acquired hotels designated for sale from this portfolio.
On January 25, 2006, in an underwritten follow-on public offering, the Company issued 12,107,623 shares of its common stock at $11.15 per share, which generated gross proceeds of approximately $135.0 million. The aggregate proceeds to the Company, net of underwriters' discount and offering costs, was approximately $128.6 million. The 12,107,623 shares issued include 1,057,623 shares sold pursuant to an over-allotment option granted to the underwriters. The net proceeds were used for a $60.0 million pay-down on the Company's $100.0 million credit facility due August 17, 2008, a $45.0 million pay-down on the Company's $45.0 million mortgage loan due October 10, 2007, and the acquisition of the Marriott at Research Triangle Park, as discussed below.
On February 16, 2006, the Company entered into a definitive agreement to acquire the Pan Pacific San Francisco Hotel in San Francisco, California, for approximately $95.0 million in cash. The Company intends to use proceeds from its follow-on public offering on January 25, 2006, and funds available on its credit facility to fund this acquisition. The acquisition is expected to close in early April 2006.
On February 24, 2006, the Company acquired the Marriott at Research Triangle Park hotel property in Durham, North Carolina, for approximately $28.0 million in cash. The Company used proceeds from its follow-on public offering on January 25, 2006, to fund this acquisition.
INVESTMENT OUTLOOK
Mr. Bennett concluded, "The past year Ashford excelled at its strategic objectives of: diversified and accretive investments, strong internal growth, financial stability, and dividend increases. With a very successful capital raise completed early in the first quarter, we have been able to make a strong start in 2006 in continuing our core objectives. Since year end, we have acquired the Marriott at Research Triangle Park and agreed to purchase the Pan Pacific San Francisco for a combined investment of $123 million. In addition, we have an active pipeline. These attractive external growth opportunities complement the continued improvement in our capital structure, the double- digit RevPAR growth in our current portfolio generated by value-added reinvestment and our ongoing capital recycling program. Combined with a very optimistic industry outlook, we believe these factors position us to achieve our most successful year yet in 2006."
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