Financial Performance Overview

Ashford Hospitality Trust, a real estate investment trust (REIT) that owns hotel properties, has released its financial report for the year ended December 31, 2024. The report provides insights into the company’s financial performance, key trends, strengths, weaknesses, and outlook for the future.

In 2024, Ashford Hospitality Trust’s total revenue decreased by $195.1 million, or 14.3%, to $1.17 billion compared to 2023. This decline was primarily attributable to the sale of several hotel properties and the derecognition of assets related to the KEYS A and KEYS B loan pools, which went into receivership.

Despite the revenue decrease, the company’s net loss attributable to common stockholders improved significantly, decreasing from $193.7 million in 2023 to $82.5 million in 2024. This improvement was driven by several factors, including:

• A $167.2 million gain on the derecognition of assets related to the KEYS A and KEYS B loan pools
• A $94.4 million gain on the sale of various hotel properties
• A $53.6 million decrease in interest expense and amortization of discounts and loan costs

Revenue and Profit Trends

Ashford Hospitality Trust’s revenue is primarily generated from its hotel operations, which include room revenue, food and beverage revenue, and other ancillary revenue. The company’s key performance indicators, such as occupancy, average daily rate (ADR), and revenue per available room (RevPAR), showed mixed results in 2024 compared to 2023.

Occupancy decreased slightly from 70.65% in 2023 to 70.57% in 2024, while ADR increased from $184.47 to $190.75. As a result, RevPAR increased from $130.19 in 2023 to $132.87 in 2024, a 2.1% improvement.

The company’s hotel operating expenses decreased by $110.1 million, or 11.9%, in 2024 compared to 2023. This decrease was primarily due to the sale of several hotel properties and the derecognition of the KEYS A and KEYS B loan pool assets.

Ashford Hospitality Trust’s adjusted funds from operations (Adjusted FFO), a key metric used to evaluate the performance of REITs, decreased from $26.4 million in 2023 to a loss of $23.1 million in 2024. This decline was mainly due to the impact of the hotel dispositions and the derecognition of the KEYS A and KEYS B loan pool assets.

Strengths and Weaknesses

One of the company’s key strengths is its ability to generate significant gains from the sale of hotel properties and the derecognition of assets. In 2024, the company recognized a $167.2 million gain on the derecognition of the KEYS A and KEYS B loan pool assets, as well as a $94.4 million gain on the sale of various hotel properties.

Another strength is the company’s efforts to reduce its debt burden. In 2024, the company refinanced several mortgage loans, which resulted in approximately $31 million of excess proceeds that were used to pay down the Oaktree term loan. Additionally, the company is in active discussions with lenders to extend the maturity dates of several of its mortgage loans.

However, the company’s reliance on variable-rate debt is a weakness. As of December 31, 2024, the company had $2.5 billion of variable-rate debt, which exposes it to interest rate risk. A 25-basis point change in interest rates would impact the company’s results of operations by approximately $6.4 million per year.

Another weakness is the company’s ongoing challenges with certain hotel properties, as evidenced by the $59.3 million impairment charge recorded in 2024 for the Hilton Costa Mesa and the Embassy Suites Portland. These impairment charges were due to reduced estimated cash flows resulting from changes to the expected holding periods of these hotel properties.

Outlook and Future Strategies

Ashford Hospitality Trust’s current key priorities and financial strategies include preserving capital, disposing of non-core hotel properties, acquiring accretive hotel properties, pursuing capital market activities, accessing cost-effective capital, opportunistically exchanging preferred stock into common stock, implementing selective capital improvements, and utilizing hedges and other strategies to mitigate risks.

The company is also focused on implementing effective asset management strategies to minimize operating costs and increase revenues, financing or refinancing hotels on competitive terms, modifying or extending property-level indebtedness, and making other investments or divestitures that the board of directors deems appropriate.

One of the company’s recent developments is the announcement of a transformative strategic initiative called “GRO AHT,” which centers around three core pillars: G&A Reduction, Revenue Maximization, and Operational Efficiency. This initiative is designed to drive outsized EBITDA growth and substantially improve shareholder value.

Additionally, the company has been actively raising capital through the issuance of non-traded preferred stock, including the Series J and Series K Preferred Stock offerings, as well as the upcoming Series L and Series M Preferred Stock offerings. These capital-raising activities are expected to provide the company with additional financial flexibility and resources to execute its strategic initiatives.

Overall, Ashford Hospitality Trust’s financial performance in 2024 was mixed, with a decline in revenue but an improvement in net loss. The company’s ability to generate significant gains from asset sales and derecognition of assets, as well as its efforts to reduce debt, are strengths. However, the company’s reliance on variable-rate debt and ongoing challenges with certain hotel properties are weaknesses. The company’s focus on strategic initiatives, capital-raising activities, and debt management suggest a cautiously optimistic outlook for the future.