RevPAR increased 7.5% for the hotels not under re
Ashford Hospitality Trust, Inc. (NYSE:AHT) today reported the following results and performance measures for the fourth quarter ended December 31, 2010. The proforma performance measurements for Occupancy, Average Daily Rate (ADR), Revenue Per Available Room (RevPAR), and Hotel Operating Profit (or Hotel EBITDA) include the Company's 97 hotels owned and included in continuing operations as of December 31, 2010. Unless otherwise stated, all reported results compare the fourth quarter ended December 31, 2010, with the fourth quarter ended December 31, 2009 (see discussion below). The reconciliation of non-GAAP financial measures is included in the financial tables accompanying this press release.
FINANCIAL HIGHLIGHTS
“The strong results for the fourth quarter continue to reflect the benefit of an improving lodging market and our ability to achieve better margin improvement through differentiated asset management strategies. Combined with our opportunistic capital market activities, we have been able to position our portfolio for better performance.”
During the fourth quarter due to assets being marketed for sale, the Company recorded impairments of $39.9 million for the Hilton Tucson and $23.6 million for the Hilton Rye Town. Also the Company took impairments of $21.6 million for its JER portfolio mezzanine loan six position and an impairment of $7.8 million for a partial write down of the Tharaldson portfolio mezzanine loan maturing in April 2011. In addition, the Company received in the fourth quarter a $4.4 million payoff of its mezzanine loan secured by interests in the Hotel La Jolla, which when combined with a payment of $1.8 million in the third quarter of 2010, resulted in a discounted payoff of 87.5%.
CAPITAL STRUCTURE
In October 2010, the Company converted its $1.8 billion interest rate swap to a fixed rate of 4.09%, resulting in locked-in annual interest expense savings of approximately $32 million for the remaining term of the swap. There was no cash cost to the Company in structuring the swap, and the Company's flooridors for 2010 and 2011, remained outstanding, the latter of which may provide additional benefit.
In November 2010, the Company closed a $105 million loan with Deutsche Bank secured by the Marriott Crystal Gateway in Arlington, VA. The new financing, which has a 10-year term and a fixed interest rate of 6.26%, replaced an existing $60.8 million loan on the property that had an initial maturity date in March 2012 and had an interest rate of 400 basis points over LIBOR. The excess loan proceeds were used to pay down the Company’s credit facility and for general corporate purposes.
In December 2010, the Company closed its underwritten public offering of 7.5 million shares of its common stock at a price to the public of $9.65 per share. In January 2011, the underwriter exercised its option to purchase an additional 300,000 shares of common stock at $9.65 per share. The proceeds were used for general corporate purposes.
PORTFOLIO REVPAR
As of December 31, 2010, the Company had a portfolio of direct hotel investments consisting of 97 properties classified in continuing operations. During the fourth quarter, 80 of the hotels included in continuing operations were not under renovation. The Company believes reporting its operating metrics for continuing operations on a proforma total basis (all 97 hotels) and proforma not-under-renovation basis (80 hotels) is a measure that reflects a meaningful and focused comparison of the operating results in its direct hotel portfolio. The Company's reporting by region and brand includes the results of all 97 hotels in continuing operations. Details of each category are provided in the tables attached to this release.
For the 80 hotels as of December 31, 2010, that were not under renovation, Proforma Hotel EBITDA increased 23.5% to $42.8 million. Proforma Hotel EBITDA margin (expressed as a percentage of Total Hotel Revenue) increased 384 basis points to 27.2%. For all 97 hotels included in continuing operations as of December 31, 2010, Proforma Hotel EBITDA increased 14.7% to $60.7 million and Hotel EBITDA margin increased 256 basis points to 26.9%.
Ashford believes year-over-year Hotel EBITDA and Hotel EBITDA margin comparisons are more meaningful to gauge the performance of the Company’s hotels than sequential quarter-over-quarter comparisons. Given the substantial seasonality in the Company’s portfolio and its active capital recycling, to help investors better understand this seasonality, the Company provides quarterly detail on its Proforma Hotel EBITDA and Proforma Hotel EBITDA margin for the current and certain prior-year periods based upon the number of core hotels in the portfolio as of the end of the current period. As Ashford’s portfolio mix changes from time to time so will the seasonality for Proforma Hotel EBITDA and Proforma Hotel EBITDA margin. The details of the quarterly calculations for the previous four quarters for the current portfolio of 97 hotels included in continuing operations are provided in the tables attached to this release.
COMMON STOCK DIVIDEND REINSTATED
Ashford announced that the Board of Directors has declared a dividend on the Company’s common stock for the first quarter of 2011 of $0.10 per share and has given guidance that while each future quarter’s dividend, if any, will be definitively announced near the end of each quarter, the Company intends to maintain at least a $.10 per share dividend per quarter going forward. The dividend is payable on April 15, 2011, to shareholders of record as of March 31, 2011, and equates to an annualized yield of 4.1% based on today’s closing stock price.
Monty J. Bennett, Chief Executive Officer, commented, “The strong results for the fourth quarter continue to reflect the benefit of an improving lodging market and our ability to achieve better margin improvement through differentiated asset management strategies. Combined with our opportunistic capital market activities, we have been able to position our portfolio for better performance.”
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