ASHFORD HOSPITALITY TRUST INC

Previous wording

The following table summarizes the changes in key line items from our consolidated statements of operations for the three months ended March 31, 2024 and 2023 (in thousands):

Current wording

The following table summarizes the changes in key line items from our consolidated statements of operations for the three and six months ended June 30, 2024 and 2023 (in thousands):

Previous wording

All hotel properties held during the three months ended March 31, 2024 and 2023 have been included in our results of operations during the respective periods in which they were held. Based on when a hotel property was acquired or disposed, operating results for certain hotel properties are not comparable for the three months ended March 31, 2024 and 2023. 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 transactions affect the reporting comparability of our consolidated financial statements:

Current wording

All hotel properties held during the three and six months ended June 30, 2024 and 2023 have been included in our results of operations during the respective periods in which they were held. 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, 2024 and 2023. 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 transactions affect the reporting comparability of our consolidated financial statements:

Previous wording

The following table illustrates the key performance indicators of the operating hotel properties included in our results of operations:

Current wording

The following table illustrates the key performance indicators of the operating hotel properties and WorldQuest included in our results of operations:

Previous wording

The following table illustrates the key performance indicators of the 75 comparable hotel properties and four consolidated Stirling OP properties that were included in our results of operations for the full three months ended March 31, 2024 and 2023, respectively:

Current wording

The following table illustrates the key performance indicators of the 69 comparable hotel properties and four consolidated Stirling OP properties that were included in our results of operations for the full three and six months ended June 30, 2024 and 2023, respectively:

Previous wording

Comparison of the Years ended March 31, 2024 and 2023

Current wording

Comparison of the Three Months Ended June 30, 2024 and 2023

Previous wording

Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $132.5 million from net loss of $60.9 million for the three months ended March 31, 2023 (the “2023 quarter”) to net income of $71.6 million for the three months ended March 31, 2024 (the “2024 quarter”) as a result of the factors discussed below.

Current wording

Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $74.9 million, from a net loss of $24.6 million for the three months ended June 30, 2023 (the “2023 quarter”) to net income of $50.3 million for the three months ended June 30, 2024 (the “2024 quarter”) as a result of the factors discussed below.

Previous wording

Revenue. Rooms revenue from our hotel properties decreased $23.7 million, or 9.4%, to $229.2 million in the 2024 quarter compared to the 2023 quarter. This decrease is attributable to $16.2 million from our Hotel Dispositions, $7.6 million for the KEYS A and B properties that went into receivership and $312,000 from the Stirling hotel properties, offset by higher rooms revenue of $432,000 at our comparable hotel properties. Our comparable hotel properties experienced an increase of 1.6% in room rates and a decrease of (169) basis points in occupancy.

Current wording

Revenue. Rooms revenue from our hotel properties decreased $50.3 million, or 17.1%, to $243.6 million in the 2024 quarter compared to the 2023 quarter. This decrease is attributable to a decrease of $31.9 million from our Hotel Dispositions, $21.8 million for the KEYS A and B properties that went into receivership, and $376,000 from the Stirling hotel properties, partially offset by higher rooms revenue of $3.8 million at our comparable hotel properties. Our comparable hotel properties experienced an increase of 1.9% in room rates and a 66 basis point increase in occupancy.

Previous wording

Property Taxes, Insurance and Other. Property taxes, insurance and other expense increased $827,000 or 5.0%, to $17.4 million in the 2024 quarter compared to the 2023 quarter, which was primarily due to an increase of $1.8 million from our comparable hotel properties and $32,000 from the Stirling hotel properties partially offset by a decrease of $954,000 from our Hotel Dispositions and 337,000 for the KEYS A and B properties that went into receivership.

Current wording

Property Taxes, Insurance and Other. Property taxes, insurance and other expense decreased $2.2 million, or 11.3%, to $16.8 million during the 2024 quarter compared to the 2023 quarter, which was primarily due to a decrease of $1.8 million from our Hotel Dispositions and $1.2 million from the KEYS A and B properties that went into receivership, partially offset by an increase of $886,000 from our comparable hotel properties.

Previous wording

Advisory Services Fee. Advisory services fee increased $2.2 million, or 17.1%, to $15.2 million in the 2024 quarter compared to the 2023 quarter. The advisory services fee represents fees incurred in connection with the advisory agreements between Ashford Inc. and the Company and between Ashford Inc. and Stirling OP. In the 2024 quarter, the advisory services fee was comprised of a base advisory fee of $8.2 million, equity-based compensation of $536,000 associated with equity grants of our common stock, PSUs, LTIP units and Performance LTIP units awarded to the officers and employees of Ashford Inc.

Current wording

Advisory Services Fee. Advisory services fee decreased $795,000, or 6.5%, to $11.5 million in the 2024 quarter compared to the 2023 quarter. The advisory services fee represents fees incurred in connection with the advisory agreement between Ashford Inc. and the Company. In the 2024 quarter, the advisory services fee was comprised of a base advisory fee of $8.2 million, equity-based compensation of $507,000 associated with equity grants of our common stock, PSUs, LTIP units and Performance LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of $2.8 million. In the 2023 quarter, the advisory services fee was comprised of a base advisory fee of $8.2 million, equity-based compensation of $955,000 associated with equity grants of our common stock and LTIP units awarded to the officers and employees of Ashford Inc. and reimbursable expenses of $3.1 million.

Previous wording

Interest Income. Interest income was $2.0 million and $2.6 million in the 2024 quarter and the 2023 quarter, respectively. The decrease in interest income in the 2024 quarter was primarily attributable to lower excess cash balances in the 2024 quarter compared to the 2023 quarter.

Current wording

Interest Income. Interest income was $1.7 million and $2.3 million for the 2024 quarter and the 2023 quarter, respectively. The decrease in interest income in the 2024 quarter was primarily attributable to lower excess cash balances in the 2024 quarter compared to the 2023 quarter.

Previous wording

Interest Expense Associated with Hotels in Receivership. Interest expense associated with hotels in receivership increased $5.0 million, or 69.3%, from $7.1 million in the 2023 quarter to $12.1 million in the 2024 quarter. The increase is primarily due to higher interest rates, default charges and late fees on the KEYS Pool A and KEYS Pool B mortgage loans.

Current wording

Interest Expense Associated with Hotels in Receivership. Interest expense associated with hotels in receivership increased $3.5 million, from $8.5 million in the 2023 period to $11.9 million in the 2024 period. The increase is due to higher interest rates, default charges and late fees on the KEYS Pool A and KEYS Pool B mortgage loans.

Previous wording

Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees decreased $402,000 to $18,000 in the 2024 quarter compared to the 2023 quarter. In the 2024 quarter, we incurred fees of $18,000 related to loan refinances and modifications. In the 2023 quarter, we incurred fees of $402,000 related to various loan modifications.

Current wording

Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees increased $2.8 million to $3.8 million in the 2024 quarter compared to the 2023 quarter. In the 2024 quarter, we incurred fees of $3.0 million related to loan refinances and modifications, and $796,000 write-off of unamortized loan cost. In the 2023 quarter, we incurred fees of $950,000 related to loan refinances and modifications.

Previous wording

Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain (loss) on derivatives changed $10.2 million from a loss of $5.4 million in the 2023 quarter to a gain of $4.8 million in the 2024 quarter. In the 2024 quarter, we recognized an unrealized gain of $2.6 million from the revaluation of the embedded debt derivative in the Oaktree Agreement and a realized gain of $8.7 million related to payments from counterparties on interest rate caps, partially offset by an unrealized loss of $6.6 million associated with interest rate caps. In the 2023 quarter, we recognized an unrealized loss of $14.0 million associated with interest rate caps and an unrealized loss of $934,000 from the revaluation of the embedded debt derivative in the Oaktree Agreement partially offset by a realized gain of $9.5 million related to payments from counterparties on interest rate caps.

Current wording

Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain on derivatives decreased $11.2 million from $12.6 million in the 2023 quarter to $1.4 million in the 2024 quarter. In the 2024 quarter, we recognized a realized gain of $7.4 million related to payments from counterparties on interest rate caps, partially offset by an unrealized loss of $5.9 million associated with interest rate caps and an unrealized loss of $128,000 from the revaluation of the embedded debt derivative in the Oaktree Agreement. In the 2023 quarter, we recognized a realized gain of $12.0 million related to payments from counterparties on interest rate caps and an unrealized gain of $2.0 million from the revaluation of the embedded debt derivative in the Oaktree Agreement, partially offset by an unrealized loss of $1.3 million associated with interest rate caps.

Previous wording

Income Tax (Expense) Benefit. Income tax expense increased $82,000, from $221,000 in the 2023 quarter to $303,000 in the 2024 quarter. This increase was primarily due to an increase in current state taxes in the 2024 quarter compared to the 2023 quarter.

Current wording

Income Tax (Expense) Benefit. Income tax expense increased $1.4 million, from $2.1 million in the 2023 quarter to $3.5 million in the 2024 quarter. This increase was primarily due to an increase in current state taxes in the 2024 quarter compared to the 2023 quarter.

Previous wording

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net income of $853,000 in the 2024 quarter and a net loss of $600,000 in the 2023 quarter. Redeemable noncontrolling interests represented ownership interests of 1.25% and 0.92% in the operating partnership at March 31, 2024 and 2023, respectively.

Current wording

Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated net income of $565,000 in the 2024 quarter and a net loss of $349,000 in the 2023 quarter. Redeemable noncontrolling interests represented ownership interests of 1.26% and 1.14% in the operating partnership at June 30, 2024 and 2023, respectively.

Previous wording

Food and beverage revenue decreased $1.6 million, or 2.8%, to $57.4 million in the 2024 quarter compared to the 2023 quarter. This decrease is attributable to $3.1 million from our Hotel Dispositions and $152,000 for the KEYS A and B properties that went into receivership offset by higher sales of food and beverage of $1.6 million at our comparable hotel properties.

Current wording

Food and beverage revenue decreased $8.1 million, or 6.7%, to $112.6 million in the 2024 period compared to the 2023 period. This decrease is attributable to $8.0 million from our Hotel Dispositions and $799,000 for the KEYS A and B properties that went into receivership, partially offset by higher sales of food and beverage of $657,000 at our comparable hotel properties.

Previous wording

Other hotel revenue, which consists mainly of Internet access, parking, and spa revenue, increased $410,000, or 2.5%, to $16.7 million in the 2024 quarter compared to the 2023 quarter. This increase is attributable to higher other revenue of $2.1 million from our comparable hotel properties and $5,000 from the Stirling hotel properties, partially offset by a decrease of $1.4 million from our Hotel Dispositions and $321,000 for the KEYS A and B properties that went into receivership. Other revenue decreased $19,000, or 2.9%, to $639,000 in the 2024 quarter compared to the 2023 quarter.

Current wording

Other hotel revenue, which consists mainly of Internet access, parking, and spa revenue, decreased $2.0 million, or 5.5%, to $33.6 million in the 2024 period compared to the 2023 period. This decrease is attributable to $4.1 million from our Hotel Dispositions and $1.2 million for the KEYS A and B properties that went into receivership, partially offset by higher other revenue of $3.3 million from our comparable hotel properties. Other revenue decreased $107,000, or 7.5%, to $1.3 million in the 2024 period compared to the 2023 period.

Previous wording

Hotel Operating Expenses. Hotel operating expenses decreased $14.2 million, or 6.3%, to $210.9 million in the 2024 quarter compared to the 2023 quarter. 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 $6.7 million in the 2024 quarter compared to the 2023 quarter, comprised of a decrease of $7.1 million from our Hotel Dispositions and $2.0 million for the KEYS A and B properties that went into receivership offset by an increase of $2.4 million from our comparable hotel properties. Direct expenses were 31.4% of total hotel revenue for the 2024 quarter and 31.0% for the 2023 quarter. Indirect expenses and management fees decreased $7.5 million in the 2024 quarter compared to the 2023 quarter, comprised of an decrease of $7.6 million from our Hotel Dispositions and $3.2 million for the KEYS A and B properties that went into receivership offset by an increase of $3.2 million from our comparable hotel properties.

Current wording

Hotel Operating Expenses. Hotel operating expenses decreased $47.5 million, or 10.2%, to $418.3 million in the 2024 period compared to the 2023 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 $23.6 million in the 2024 period compared to the 2023 period, comprised of a decrease of $17.7 million from our Hotel Dispositions and $8.4 million for the KEYS A and B properties that went into receivership, partially offset by an increase of $2.6 million from our comparable hotel properties. Direct expenses were 30.6% of total hotel revenue for the 2024 period and 30.3% for the 2023 period. Indirect expenses and management fees decreased $23.9 million in the 2024 period compared to the 2023 period, comprised of a decrease of $21.6 million from our Hotel Dispositions, $12.2 million for the KEYS A and B properties that went into receivership, and $199,000 from the Stirling hotel properties, partially offset by an increase of $10.0 million from our comparable hotel properties.

Previous wording

Depreciation and Amortization. Depreciation and amortization decreased $7.3 million or 15.3%, to $40.5 million in the 2024 quarter compared to the 2023 quarter, which consisted of lower depreciation of $2.3 million from our comparable hotel properties primarily related to fully depreciated assets, $3.8 million from our Hotel Dispositions and $1.4 million for the KEYS A and B properties that went into receivership.

Current wording

Depreciation and Amortization. Depreciation and amortization decreased $17.3 million or 18.2%, to $77.7 million in the 2024 period compared to the 2023 period, which consisted of lower depreciation of $2.9 million from our comparable hotel properties primarily related to fully depreciated assets, $10.0 million from our Hotel Dispositions and $4.7 million for the KEYS A and B properties that went into receivership, partially offset by an increase of $292,000 from our Stirling hotel properties.

Previous wording

Corporate, General and Administrative. Corporate, general and administrative expense increased $5.7 million, or 216.7%, to $8.3 million in the 2024 quarter compared to the 2023 quarter. The increase was primarily attributable to higher reimbursed operating expenses of Ashford Securities of $4.8 million, higher legal and professional fees of $237,000, higher other expense of $108,000 and $544,000 of costs related to start-up expenses of Stirling Inc.

Current wording

Corporate, General and Administrative. Corporate, general and administrative expense increased $7.9 million, or 104.9%, to $15.4 million in the 2024 period compared to the 2023 period. The increase was primarily attributable to higher reimbursed operating expenses of Ashford Securities of $5.4 million, higher legal and professional fees of $2.5 million, higher other expense of $340,000, partially offset by lower public company cost of $272,000.

Previous wording

Gain (Loss) on Derecognition of Assets. Gain on derecognition of assets was $133.9 million in the 2024 quarter related to the derecognition of assets related to the hotel properties securing the KEYS Pool A and KEYS Pool B mortgage loans that were placed into receivership in March 2024.

Current wording

Gain (Loss) on Derecognition of Assets. Gain on derecognition of assets was $145.6 million in the 2024 period. The gain includes the initial gain of $133.9 million related to the derecognition of assets related to the hotel properties securing the KEYS Pool A and KEYS Pool B mortgage loans that were placed into receivership in March 2024. Additionally, during the second quarter of 2024 we recognized a gain of $11.7 million, which primarily represents the accrued interest expense associated with the default of the KEYS A and KEYS B loans accrued during the second quarter of 2024, which resulted in a corresponding increase of the contract asset on our consolidated balance sheet as we expect to be released from this obligation upon final resolution with the lender. See note 7.

Previous wording

Equity in Earnings (Loss) of Unconsolidated Entities. Equity in loss of unconsolidated entities was $534,000 in the 2024 quarter, which consisted of equity in loss of $109,000 from OpenKey and $425,000 from an investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage in Napa, California and $396,000 in the 2023 quarter, which consisted of our share of loss of $150,000 in OpenKey and $246,000 in the Meritage investment.

Current wording

Equity in Earnings (Loss) of Unconsolidated Entities. Equity in loss of unconsolidated entities was $695,000 in the 2024 period, which consisted of equity in loss of $289,000 from OpenKey and $406,000 from an investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage in Napa, California and $577,000 in the 2023 period which consisted of our share of loss of $302,000 in OpenKey and $275,000 in the Napa resort investment.

Previous wording

Other Income (Expense). In the 2024 quarter and the 2023 quarter we recorded miscellaneous income of $35,000 and $134,000, respectively.

Current wording

Other Income (Expense). In the 2024 period and the 2023 period we recorded miscellaneous income of $72,000 and $243,000, respectively.

Previous wording

Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs decreased $407,000, or 0.5%, to $74.0 million in the 2024 quarter compared to the 2023 quarter. The decrease was primarily due to lower cash interest expense and amortization of loan costs of $2.5 million on the Oaktree loan attributable to a lower principal balance and the Oaktree deferred loan costs becoming fully amortized and $4.7 million from our Hotel Dispositions, partially offset by a $3.7 million increase in interest expense at our comparable hotel properties primarily due to higher interest rates on our variable rate debt and lower credits to interest expense of $3.0 million related to the amortization credit of default interest and late charges recorded on mortgage loans previously in default. The average SOFR rates in the 2024 quarter and the 2023 quarter were 5.33% and 4.50%, respectively. The average LIBOR rate in the 2023 quarter was 4.62%.

Current wording

Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs decreased $13.1 million, or 8.4%, to $142.4 million in the 2024 period compared to the 2023 period. The decrease was primarily due to lower cash interest expense and amortization of loan costs of $10.7 million on the Oaktree loan attributable to a lower principal balance and the Oaktree deferred loan costs becoming fully amortized and $12.0 million from our Hotel Dispositions, partially offset by a $5.7 million increase in interest expense at our comparable hotel properties primarily due to higher interest rates on our variable rate debt and lower credits to interest expense of $3.3 million related to the amortization credit of default interest and late charges recorded on mortgage loans previously in default and $603,000 at our Stirling properties related to the new loan with a higher interest rate. The average SOFR rates in the 2024 period and the 2023 period were 5.33% and 4.62%, respectively. The average LIBOR rate in the 2023 period was 4.85%.

Previous wording

Gain (loss) on extinguishment of debt. Gain on extinguishment of debt was $45,000 in the 2024 quarter primarily related to the deed in lieu of foreclosure transaction for the KEYS Pool F mortgage loan.

Current wording

Gain (loss) on extinguishment of debt. Gain on extinguishment of debt was $45,000 in the 2024 period primarily related to the deed in lieu of foreclosure transaction for the KEYS Pool F mortgage loan.

Previous wording

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Our noncontrolling interest partners in consolidated entities were allocated a loss of $9,000 in 2023.

Current wording

(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Our noncontrolling interest partners in consolidated entities were allocated a loss of $17,000 in the 2024 period.

Previous wording

As of March 31, 2024, the Company held cash and cash equivalents of $112.7 million and restricted cash of $135.7 million (including amounts held for sale), the vast majority of which is comprised of lender and manager-held reserves. As of March 31, 2024, $23.5 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. At March 31, 2024, our net debt to gross assets was 68.5%.

Current wording

As of June 30, 2024, the Company held cash and cash equivalents of $121.8 million and restricted cash of $124.5 million, the vast majority of which is comprised of lender and manager-held reserves. As of June 30, 2024, $22.2 million was also due to the Company from third-party hotel managers, most of which is held by one of the Company’s managers and is available to fund hotel operating costs. At June 30, 2024, our net debt to gross assets was 66.1%.

Previous wording

The Company continues to work with the lender for the KEYS A and KEYS B loan pools on a consensual transfer of ownership of those hotels to the lender, and the Company anticipates that transfer could occur in the second quarter of 2024. The original lenders previously transferred the loans to a securitization trust. On March 1, 2024, the Company received notice that the hotel properties securing the KEYS A and KEYS B loan pools have been transferred to a court-appointed receiver. Below is a summary of the hotel properties securing the KEYS Pool A loan and KEYS Pool B loan:

Current wording

The Company continues to work with the lender for the KEYS A and KEYS B loan pools on a consensual transfer of ownership of those hotels to the lender, and the Company anticipates that transfer could occur in the second half of 2024. The original lenders previously transferred the loans to a securitization trust. On March 1, 2024, the Company received notice that the hotel properties securing the KEYS A and KEYS B loan pools have been transferred to a court-appointed receiver. Below is a summary of the hotel properties securing the KEYS Pool A loan and KEYS Pool B loan:

Previous wording

We derecognized the hotel properties securing the KEYS Pool A and KEYS Pool B loans from our consolidated balance sheet in March 2024, when the receiver took control of the hotels, and accordingly recognized a gain of $133.9 million, which is included in “gain (loss) on derecognition of assets” in our consolidated statements of operations and recorded a contract asset of $378.2 million, which represents the liabilities we expect to be released from upon final resolution with the lender on the KEYS Pool A and KEYS Pool B loans in exchange for the transfer of ownership of the respective hotel properties. The $180.7 million KEYS Pool A and the $174.4 million KEYS Pool B mortgage loans as well as all accrued and unpaid interest, default charges and late fees will remain liabilities of the Company until final resolution with the lender is concluded, and thus is included in “indebtedness associated with hotels in receivership” and “accrued interest associated with hotels in receivership” on our consolidated balance sheets.

Current wording

We derecognized the hotel properties securing the KEYS Pool A and KEYS Pool B loans from our consolidated balance sheet in March 2024, when the receiver took control of the hotel properties, and accordingly recognized a gain of $133.9 million, which is included in “gain (loss) on derecognition of assets” in our consolidated statements of operations and recorded a contract asset of $378.2 million as of June 30, 2024, which represented the liabilities we expect to be released from upon final resolution with the lenders on the KEYS Pool A and KEYS Pool B mortgage loans in exchange for the transfer of ownership of the respective hotel properties. During the three months ended June 30, 2024, we recognized an additional gain of $11.7 million, which is included in “gain (loss) on derecognition of assets” in our consolidated statements of operations that increased the contract asset to a total of $390.1 million at June 30, 2024, which is the amount we expect to be released from. The additional gain primarily represents the additional accrued interest expense recorded during the three months ended June 30, 2024. The $180.7 million KEYS Pool A and the $174.4 million KEYS Pool B mortgage loans as well as all accrued and unpaid interest, default charges and late fees will remain liabilities until final resolution with the lenders is concluded, and thus is included in “indebtedness associated with hotels in receivership” and “accrued interest associated with hotels in receivership” on our consolidated balance sheets. On July 2, 2024, the Courtyard Plano Legacy Park and the Residence Inn Plano were foreclosed on at a public auction.

Previous wording

On March 4, 2022, the Company filed an initial registration statement on Form S-3 with the SEC, as amended on April 29, 2022, related to the Company’s non-traded Series J Preferred Stock and Series K Preferred Stock. The registration statement was declared effective by the SEC on May 4, 2022, and contemplates the offering of up to (i) 20.0 million shares of Series J Preferred Stock or Series K Preferred Stock in a primary offering and (ii) 8.0 million shares of Series J Preferred Stock or Series K Preferred Stock pursuant to a dividend reinvestment plan. On May 5, 2022, we filed our prospectus for the offering with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager for the offering. As of May 7, 2024, the Company has issued approximately 4.6 million shares (exclusive of the dividend reinvestment plan shares) of Series J Preferred Stock and received net proceeds of approximately $102.6 million and approximately 310,000 shares (exclusive of the dividend reinvestment plan shares) of Series K Preferred Stock and received net proceeds of approximately $7.5 million.

Current wording

On March 4, 2022, the Company filed an initial registration statement on Form S-3 with the SEC, as amended on April 29, 2022, related to the Company’s non-traded Series J Preferred Stock and Series K Preferred Stock. The registration statement was declared effective by the SEC on May 4, 2022, and contemplates the offering of up to (i) 20.0 million shares of Series J Preferred Stock or Series K Preferred Stock in a primary offering and (ii) 8.0 million shares of Series J Preferred Stock or Series K Preferred Stock pursuant to a dividend reinvestment plan. On May 5, 2022, we filed our prospectus for the offering with the SEC. Ashford Securities, a subsidiary of Ashford Inc., serves as the dealer manager for the offering. As of August 6, 2024, the Company has issued approximately 5.7 million shares (exclusive of the dividend reinvestment plan shares) of Series J Preferred Stock and received net proceeds of approximately $127.2 million and approximately 408,000 shares (exclusive of the dividend reinvestment plan shares) of Series K Preferred Stock and received net proceeds of approximately $9.9 million.

Previous wording

On April 11, 2022, the Company entered into the Virtu Equity Distribution Agreement with Virtu, to sell from time to time shares of the Company’s common stock having an aggregate offering price of up to $100 million. We will pay Virtu a commission of approximately 1% of the gross sales price of the shares of our common stock sold. The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale. As of May 7, 2024, the Company has issued approximately 4.2 million shares of common stock for gross proceeds of approximately $6.5 million under the Virtu Equity Distribution Agreement.

Current wording

On April 11, 2022, the Company entered into the Virtu Equity Distribution Agreement with Virtu, to sell from time to time shares of the Company’s common stock having an aggregate offering price of up to $100 million. We will pay Virtu a commission of approximately 1% of the gross sales price of the shares of our common stock sold. The Company may also sell some or all of the shares of our common stock to Virtu as principal for its own account at a price agreed upon at the time of sale. As of August 6, 2024, the Company has issued approximately 8.0 million shares of common stock for gross proceeds of approximately $10.8 million under the Virtu Equity Distribution Agreement.

Previous wording

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 $(46.5) million and $4.6 million for the three months ended March 31, 2024 and 2023, respectively. Cash flows provided by (used in) operations were impacted by changes in hotel operations, our hotel disposition and derecognition of assets in 2024, 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.

Current wording

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 $(38.5) million and $35.3 million for the six months ended June 30, 2024 and 2023, respectively. Cash flows provided by (used in) operations were impacted by changes in hotel operations, our hotel dispositions and derecognized assets in 2024, 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.

Previous wording

Net Cash Flows Provided by (Used in) Investing Activities. For the three months ended March 31, 2024, net cash flows used in investing activities were $16.8 million. Cash outflows consisted of $33.9 million for capital improvements made to various hotel properties and $1.9 million from the issuance of a note receivable, partially offset by cash inflows of $18.9 million of net proceeds from the disposition of assets and hotel properties and $154,000 from property insurance proceeds.

Current wording

Net Cash Flows Provided by (Used in) Investing Activities. For the six months ended June 30, 2024, net cash flows provided by investing activities were $233.3 million. Cash inflows consisted of $300.0 million of net proceeds from the disposition of assets and hotel properties and $755,000 from property insurance proceeds, partially offset by cash outflows of $64.8 million for capital improvements made to various hotel properties and $2.6 million from the issuance of a note receivable.

Previous wording

For the three months ended March 31, 2023, net cash flows used in investing activities were $29.4 million. Cash outflows primarily consisted of $29.3 million for capital improvements made to various hotel properties and $149,000 of payments for franchise fees, partially offset by cash inflows of $75,000 related to proceeds from property insurance.

Current wording

For the six months ended June 30, 2023, net cash flows used in investing activities were $49.6 million. Cash outflows primarily consisted of $68.0 million for capital improvements made to various hotel properties and $149,000 of payments for franchise fees, partially offset by cash inflows of $18.2 million related to restricted cash received from the initial consolidation of VIE and $327,000 related to proceeds from property insurance.

Previous wording

Net Cash Flows Provided by (Used in) Financing Activities. For the three months ended March 31, 2024, net cash flows provided by financing activities were $133,000. Cash inflows primarily consisted of $20.9 million of net proceeds from preferred stock offerings, $2.0 million of net proceeds from common stock offerings and $9.1 million from counterparty payments primarily from in-the-money interest rate caps and $2.0 million of contributions from noncontrolling interest in consolidated entities, partially offset by cash outflows of $22.1 million for repayments of indebtedness, $1.9 million for payments of loan costs and exit fees, $4.6 million of payments for preferred dividends and $5.3 million of payments for derivatives.

Current wording

Net Cash Flows Provided by (Used in) Financing Activities. For the six months ended June 30, 2024, net cash flows used in financing activities were $260.1 million. Cash outflows primarily consisted of $316.4 million for repayments of indebtedness, $16.6 million for payments of loan costs and exit fees, $9.5 million of payments for preferred dividends and $15.1 million of payments for derivatives, partially offset by $28.2 million of borrowing on indebtedness, $42.3 million of net proceeds from preferred stock offerings, $7.7 million of net proceeds from common stock offerings and $16.4 million from counterparty payments from in-the-money interest rate caps and $3.0 million of contributions from a non-controlling interest in a consolidated entity.

Previous wording

For the three months ended March 31, 2023, net cash flows used in financing activities were $45.5 million. Cash outflows primarily consisted of $50.8 million for repayments of indebtedness, $6.8 million for payments of loan costs and exit fees, $3.2 million of payments for preferred dividends and $4.2 million of payments for derivatives, partially offset by $449,000 of borrowings on indebtedness, $9.9 million of net proceeds from preferred stock offerings and $9.0 million of proceeds from in-the-money interest rate caps.

Current wording

For the six months ended June 30, 2023, net cash flows used in financing activities were $123.2 million. Cash outflows primarily consisted of $257.5 million for repayments of indebtedness, $9.9 million for payments of loan costs and exit fees, $6.7 million of payments for preferred dividends and $14.2 million of payments for derivatives, partially offset by $99.7 million of borrowings on indebtedness, $34.7 million of net proceeds from preferred stock offerings and $31.0 million from counterparty payments comprised of $21.5 million from in-the-money interest rate caps and $9.5 million from the sales of interest rate caps.

Previous wording

We then further adjust EBITDAre to exclude certain additional items such as write-off of premiums, loan costs and exit fees, other income/expense, net, transaction and conversion costs, stock/unit-based compensation and non-cash items such as amortization of unfavorable contract liabilities, realized and unrealized gains/losses on derivative instruments, gains/losses on extinguishment of debt, as well as our portion of adjustments to EBITDAre of unconsolidated entities.

Current wording

We then further adjust EBITDAre to exclude certain additional items such as write-off of premiums, loan costs and exit fees, other income/expense, net, transaction and conversion costs, stock/unit-based compensation and non-cash items, such as amortization of unfavorable contract liabilities, realized and unrealized gains/losses on derivative instruments, gains/losses on extinguishment of debt, severance, as well as our portion of adjustments to EBITDAre of unconsolidated entities.

Previous wording

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 consolidation of VIE and disposition of assets, 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, other income/expense, net, transaction and conversion costs, legal, advisory and settlement costs, stock/unit-based compensation, gains/losses on insurance settlements and non-cash items such as deemed dividends on redeemable preferred stock, amortization of loan costs, amortization of credit facility exit fee, default interest and late fees, unrealized gains/losses on derivative instruments, gains/losses on extinguishment of debt and preferred stock and interest expense associated with hotels in receivership and 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 present FFO and Adjusted FFO because we consider FFO and Adjusted FFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and Adjusted FFO when reporting their results. FFO and Adjusted FFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and Adjusted FFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and Adjusted FFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. 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 t…

Excerpt shortened here; the source contains the full paragraph.

Current wording

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 consolidation of VIE and disposition of assets, 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, other income/expense, net, transaction and conversion costs, legal, advisory and settlement costs, stock/unit-based compensation, gains/losses on insurance settlements and non-cash items such as deemed dividends on redeemable preferred stock, amortization of loan costs, amortization of credit facility exit fee, default interest and late fees, unrealized gains/losses on derivative instruments, gains/losses on extinguishment of debt and preferred stock, severance, and interest expense associated with hotels in receivership and 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 present FFO and Adjusted FFO because we consider FFO and Adjusted FFO important supplemental measures of our operational performance and believe they are frequently used by securities analysts, investors and other interested parties in the evaluation of REITs, many of which present FFO and Adjusted FFO when reporting their results. FFO and Adjusted FFO are intended to exclude GAAP historical cost depreciation and amortization, which assumes that the value of real estate assets diminishes ratably over time. Historically, however, real estate values have risen or fallen with market conditions. Because FFO and Adjusted FFO exclude depreciation and amortization related to real estate assets, gains and losses from real property dispositions and impairment losses on real estate assets, FFO and Adjusted FFO provide performance measures that, when compared year over year, reflect the effect to operations from trends in occupancy, guestroom rates, operating costs, development activities and interest costs, providing perspective not immediately apparent from net income. 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 …

Excerpt shortened here; the source contains the full paragraph.