Overview of the Company’s Financial Performance

Ashford Hospitality Trust, Inc. (the “Company”) is a real estate investment trust (REIT) that owns and invests in upper upscale full-service hotels. As of June 30, 2024, the Company’s portfolio consisted of 69 consolidated operating hotel properties with 17,087 total rooms, as well as four consolidated operating hotel properties with 405 total rooms owned through a 99.3% ownership interest in Stirling OP.

The Company’s net income attributable to common stockholders changed significantly, from a net loss of $85.5 million for the six months ended June 30, 2023 to net income of $121.8 million for the six months ended June 30, 2024. This $207.3 million improvement was driven by several key factors:

Revenue and Profit Trends

• Total revenue decreased $84.3 million, or 12.0%, to $620.4 million in the first half of 2024 compared to the same period in 2023. This was primarily due to decreases from hotel dispositions, the derecognition of the KEYS A and B properties that went into receivership, and lower performance at the Company’s comparable hotel properties.

• Hotel operating expenses decreased $47.5 million, or 10.2%, to $418.3 million, driven by lower costs from the hotel dispositions and KEYS A and B properties, partially offset by higher costs at the Company’s comparable hotels.

• Depreciation and amortization expense decreased $17.3 million, or 18.2%, due to lower depreciation from the hotel dispositions, KEYS A and B properties, and the Company’s comparable hotels.

• The Company recognized significant gains of $94.4 million and $145.6 million from the disposition of hotel assets and the derecognition of the KEYS A and B properties, respectively.

These factors led to a substantial improvement in the Company’s operating income, which increased from $76.6 million in the first half of 2023 to $288.0 million in the first half of 2024.

Analysis of Strengths and Weaknesses

Strengths:

• Significant liquidity, with $121.8 million in cash and cash equivalents and $124.5 million in restricted cash as of June 30, 2024.
• Ability to generate substantial gains from the disposition of non-core hotel properties and the derecognition of the KEYS A and B properties.
• Successful refinancing of the Renaissance Nashville and Westin Princeton properties, providing additional liquidity.
• Ongoing efforts to restructure existing property-level indebtedness and access cost-effective capital.

Weaknesses:

• Continued decline in revenue and profitability at the Company’s comparable hotel properties, indicating operational challenges.
• Reliance on the Oaktree strategic financing, which has restrictive covenants and requirements.
• Uncertainty around the final resolution of the KEYS A and B loan pools, which remain liabilities on the Company’s balance sheet.
• Exposure to rising interest rates, which have increased the Company’s debt service costs.

Outlook and Future Prospects

The Company’s key priorities and financial strategies going forward include:

• Preserving capital and maintaining significant liquidity.
• Continuing to dispose of non-core hotel properties.
• Pursuing opportunistic acquisitions that are expected to be accretive.
• Accessing cost-effective capital, including through the issuance of non-traded preferred securities.
• Implementing selective capital improvements and effective asset management strategies.
• Modifying or extending property-level indebtedness on favorable terms.
• Utilizing hedges and other strategies to mitigate risks.
• Pursuing value-add additions to the hotel portfolio.

The Company’s ability to execute on these strategies will be critical in determining its future performance and ability to generate value for shareholders. Factors such as the resolution of the KEYS A and B loan pools, the Company’s success in refinancing or extending upcoming debt maturities, and its ability to improve operations at its comparable hotel properties will all be important in shaping the Company’s outlook.

Overall, the Company has taken significant steps to improve its financial position, including through strategic asset sales and the derecognition of the KEYS A and B properties. However, it continues to face operational challenges and uncertainty around its debt obligations. The Company’s future success will depend on its ability to effectively manage these risks and capitalize on opportunities to enhance long-term shareholder value.