Ashford Prime Reports First Quarter 2016 Results

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(in thousands, except share amounts)

(unaudited)

March 31, 

December 31,

2016

2015

ASSETS

Investments in hotel properties, net

$                1,082,812

$              1,091,479

Cash and cash equivalents

101,891

105,039

Restricted cash

36,374

33,135

Accounts receivable, net of allowance of $70 and $68, respectively

14,562

13,370

Inventories

1,467

1,451

Note receivable

8,098

8,098

Deferred costs, net

550

755

Prepaid expenses

5,056

3,132

Investment in securities investment fund

45,715

48,365

Investment in Ashford Inc., at fair value

8,884

10,377

Derivative assets

4,404

753

Other assets

3,445

2,543

Intangible asset, net

23,080

23,160

Due from related party, net

682

371

Due from third-party hotel managers

12,692

10,722

     Total assets

$                1,349,712

$              1,352,750

LIABILITIES AND EQUITY

Liabilities:

Indebtedness, net

$                   834,110

$                 835,592

Accounts payable and accrued expenses

47,762

43,568

Dividends payable

4,325

3,439

Unfavorable management contract liabilities

119

158

Due to Ashford Trust OP, net

13

528

Due to Ashford Inc.

5,286

6,369

Due to third-party hotel managers

1,254

1,158

Intangible liability, net

3,668

3,682

Other liabilities

1,239

1,181

Total liabilities

897,776

895,675

5.50% Series B cumulative convertible preferred stock, $0.01 par value, 2,600,000 shares issued and

outstanding at March 31, 2016 and December 31, 2015

62,236

62,248

Redeemable noncontrolling interests in operating partnership

50,858

61,781

Equity:

Common stock, $0.01 par value, 200,000,000 shares authorized, 28,461,767 and 28,471,775 shares issued and

     outstanding at March 31, 2016 and December 31, 2015, respectively

285

285

Additional paid-in capital

436,881

438,347

Accumulated deficit

(92,656)

(99,773)

     Total stockholders' equity of the Company

344,510

338,859

Noncontrolling interest in consolidated entities

(5,668)

(5,813)

     Total equity

338,842

333,046

          Total liabilities and equity

$                1,349,712

$              1,352,750

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(in thousands, except per share amounts)

(unaudited)

 Three Months Ended 

 March 31,  

2016

2015

REVENUE

Rooms

$                 69,251

$                 54,497

Food and beverage

24,865

20,230

Other

5,648

3,022

     Total hotel revenue

99,764

77,749

Other

33

40

     Total revenue

99,797

77,789

EXPENSES

Hotel operating expenses

Rooms

15,819

12,978

Food and beverage

17,445

13,069

Other expenses

28,339

20,924

Management fees 

3,807

3,104

Total hotel operating expenses

65,410

50,075

Property taxes, insurance and other

5,043

4,595

Depreciation and amortization

11,904

10,517

Advisory services fee:

Base advisory fee

2,025

2,205

Reimbursable expenses

652

546

Non-cash stock/unit-based compensation

(613)

469

Corporate, general and administrative:

Other general and administrative

3,923

1,123

Total operating expenses

88,344

69,530

OPERATING INCOME

11,453

8,259

Equity in loss of unconsolidated joint ventures

-

Equity in earnings (loss) of unconsolidated entity

(2,650)

-

Interest income

32

4

Other income (expense)

(10)

139

Interest expense

(9,753)

(8,891)

Amortization of loan costs

(881)

(692)

Write-off of loan costs and exit fees

-

(54)

Unrealized gain (loss) on investments

(1,493)

1,323

Unrealized gain (loss) on derivatives

3,533

(32)

INCOME BEFORE INCOME TAXES

231

56

Income tax expense

(370)

(481)

NET LOSS

(139)

(425)

(Income) loss from consolidated entities attributable to noncontrolling interest

(145)

147

Net loss attributable to redeemable noncontrolling interests in operating partnership

150

72

NET LOSS ATTRIBUTABLE TO THE COMPANY

(134)

(206)

Preferred dividends

(894)

-

NET LOSS ATTRIBUTABLE TO COMMON STOCKHOLDERS

$                 (1,028)

$                    (206)

LOSS PER SHARE – BASIC AND DILUTED

Basic:

     Net loss attributable to common stockholders

$                   (0.04)

$                   (0.01)

     Weighted average common shares outstanding – basic

28,343

24,070

Diluted:

Net loss attributable to common stockholders

$                   (0.04)

$                   (0.01)

Weighted average common shares outstanding – diluted

28,343

24,070

Dividends declared per common share:

$                     0.10

$                     0.05

Amounts attributable to common stockholders:

Net income (loss) attributable to the Company

$                    (134)

$                    (206)

Preferred dividends

(894)

-

Net loss attributable to common stockholders

$                 (1,028)

$                    (206)

 ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES 

 RECONCILIATION OF NET LOSS TO EBITDA AND ADJUSTED EBITDA 

 (in thousands) 

 (unaudited) 

 Three Months Ended 

 March 31,  

2016

2015

 Net loss 

$                    (139)

$                    (425)

 (Income) loss from consolidated entities attributable to noncontrolling interest 

(145)

147

 Net loss attributable to redeemable noncontrolling interests in operating partnership 

150

72

 Net loss attributable to the Company 

(134)

(206)

          Interest income

(32)

(4)

          Interest expense and amortization of loan costs

10,229

9,208

          Depreciation and amortization 

11,200

9,788

          Income tax expense

370

481

          Net loss attributable to redeemable noncontrolling interests in operating partnership

(150)

(72)

 EBITDA available to common stockholders and OP unitholders 

21,483

19,195

          Amortization of unfavorable management contract liabilities

(39)

(39)

          Write-off of loan costs and exit fees

-

54

          Unrealized (gain) loss on investments

1,493

(1,323)

          Unrealized (gain) loss on derivatives

(3,533)

29

          Other (income) expense (1)

10

(139)

          Non-cash, non-employee stock/unit-based compensation

(613)

469

          Strategic alternatives and other deal costs

3,313

272

          Advisory services incentive fee (2)

(319)

-

          Company's portion of unrealized loss of investment in securities investment fund

2,650

-

 Adjusted EBITDA available to common stockholders and OP unitholders 

$                 24,445

$                 18,518

(1)

Other (income) expense, primarily consisting of net realized gain on marketable securities is excluded from Adjusted EBITDA.  

(2)

The advisory services incentive fee is subject to the FCCR Condition (as defined in the advisory agreement) and is payable in arrears in three equal annual installments with the first installment payable on January 15 following the applicable year for which the advisory services incentive fee relates and on January 15 of the next two successive years. The adjustment for the three months ended March 31, 2016 reflects the pro-rata portion of the second installment payable on January 15, 2017, subject to the FCCR Condition.

 RECONCILIATION OF NET LOSS TO FUNDS FROM OPERATIONS ("FFO") AND ADJUSTED FFO 

 (in thousands, except per share amounts) 

 (unaudited) 

 Three Months Ended 

 March 31,  

2016

2015

 Net loss 

$                    (139)

$                    (425)

 (Income) loss from consolidated entities attributable to noncontrolling interest 

(145)

147

 Net loss attributable to redeemable noncontrolling interests in operating partnership 

150

72

 Preferred dividends 

(894)

-

 Net loss attributable to common stockholders 

(1,028)

(206)

 Depreciation and amortization on real estate 

11,200

9,788

 Net loss attributable to redeemable noncontrolling interests in operating partnership 

(150)

(72)

 FFO available to common stockholders and OP unitholders 

10,022

9,510

Preferred dividends

894

-

Unrealized (gain) loss on investments

1,493

(1,323)

Unrealized (gain) loss on derivatives

(3,533)

29

Other (income) expense (1)

10

(139)

Non-cash, non-employee stock/unit-based compensation

(613)

469

Strategic alternatives and other deal costs

3,313

272

Write-off of loan costs and exit fees

-

54

Advisory services incentive fee (2)

(319)

-

Company's portion of unrealized loss of investment in securities investment fund

2,650

-

 Adjusted FFO available to the Company and OP unitholders 

$                 13,917

$                   8,872

 Adjusted FFO per diluted share available to common stockholders and OP unitholders 

$                     0.38

$                     0.26

 Weighted average diluted shares 

36,290

32,622

NOTES:

(1)

Other (income) expense, primarily consisting of net realized gain/loss on marketable securities is excluded from Adjusted FFO.  

(2)

The advisory services incentive fee is subject to the FCCR Condition (as defined in the advisory agreement) and is payable in arrears in three equal annual installments with the first installment payable on January 15 following the applicable year for which the advisory services incentive fee relates and on January 15 of the next two successive years. The adjustment for the three months ended March 31, 2016 reflects the pro-rata portion of the second installment payable on January 15, 2017, subject to the FCCR Condition.

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

SUMMARY OF INDEBTEDNESS

MARCH 31, 2016

(dollars in thousands)

(unaudited)

 Comparable 

 Comparable 

 Fixed-Rate 

 Floating-Rate 

 Total 

 TTM Hotel 

 TTM EBITDA 

Indebtedness

Maturity

Interest Rate

 Debt 

 Debt 

 Debt 

EBITDA (6)

 Debt Yield 

 Senior credit facility - Various 

November 2016

Base Rate(5)+ 1.25% to 2.75% or LIBOR + 2.25% to 3.75%

$                      -

$                      -

(1)

$                      -

   $               N/A   

N/A

 GACC Sofitel - 1 hotel 

March 2017

LIBOR + 2.30%

-

80,000

(4)

80,000

8,248

10.3%

 Credit Agricole Pier House - 1 hotel 

March 2017

LIBOR + 2.25%

-

70,000

(2)

70,000

9,894

14.1%

 Wachovia Philly CY - 1 hotel 

April 2017

5.91%

33,256

-

33,256

12,236

36.8%

 Wachovia 3 - 2 hotels 

April 2017

5.95%

121,918

-

121,918

20,793

17.1%

 Wachovia 7 - 3 hotels 

April 2017

5.95%

248,092

-

248,092

31,793

12.8%

 Column Financial Bardessono - 1 hotel 

December 2017

LIBOR + 4.95%

-

40,000

(2)

40,000

4,237

10.6%

 Apollo Ritz-Carlton St. Thomas - 1 hotel 

December 2017

LIBOR + 4.95%

-

42,000

(2)

42,000

9,328

22.2%

 TIF Philly CY - 1 hotel 

June 2018

12.85%

8,098

-

8,098

N/A  

N/A

 Aareal - 2 hotels 

November 2019

LIBOR + 2.65%

-

194,725

(3)

194,725

28,155

14.5%

 Total 

$            411,364

$            426,725

$            838,089

$            124,684

14.9%

 Percentage 

49.1%

50.9%

100.0%

 Weighted average interest rate 

6.08%

3.40%

4.72%

All indebtedness is non-recourse with the exception of the senior credit facility.

(1)This credit facility has two one-year extension options subject to advance notice, certain conditions and a 0.25% extension fee beginning November 2016.

(2)This mortgage loan has three one-year extension options subject to satisfaction of certain conditions.

(3)This mortgage loan has two one-year extension options subject to satisfaction of certain conditions.  

(4)This mortgage loan has three one-year extension options subject to satisfaction of certain conditions, of which the first was exercised in March 2016.

(5)Base Rate, as defined in the secured revolving credit facility agreement, is the greater of (i) the prime rate set by Bank of America, or (ii) federal funds rate + 0.5%.

(6)See Exhibit 1 for reconciliation of net income (loss) to hotel EBITDA.  

 ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES 

 INDEBTEDNESS BY MATURITY ASSUMING EXTENSION OPTIONS ARE EXERCISED 

 MARCH 31, 2016 

 (in thousands) 

 (unaudited) 

2016

2017

2018

2019

2020

 Thereafter 

 Total 

 Senior credit facility - Various 

$               -

$               -

$               -

$               -

$               -

$               -

$               -

 Wachovia Philly CY - 1 hotel 

-

32,532

-

-

-

-

32,532

 Wachovia 3 - 2 hotels 

-

119,245

-

-

-

-

119,245

 Wachovia 7 - 3 hotels 

-

242,202

-

-

-

-

242,202

 TIF Philly CY - 1 hotel 

-

-

8,098

-

-

-

8,098

 GACC Sofitel - 1 hotel 

-

-

-

80,000

-

-

80,000

 Credit Agricole Pier House - 1 hotel 

-

-

-

-

70,000

-

70,000

 Column Financial Bardessono - 1 hotel 

-

-

-

-

40,000

-

40,000

 Apollo Ritz-Carlton St. Thomas - 1 hotel 

-

-

-

-

42,000

-

42,000

 Aareal - 2 hotels 

-

-

-

-

-

177,486

177,486

 Principal due in future periods 

$               -

$     393,979

$         8,098

$       80,000

$     152,000

$     177,486

$     811,563

 Scheduled amortization payments remaining 

6,713

7,526

2,939

3,120

3,312

2,916

26,526

 Total indebtedness 

$         6,713

$     401,505

$       11,037

$       83,120

$     155,312

$     180,402

$     838,089

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

KEY PERFORMANCE INDICATORS 

(unaudited)

ALL HOTELS:

Three Months Ended

March 31,

Actual

Pre-acquisition

Comparable

Actual

Pre-acquisition

Comparable

Actual

Comparable

2016

2016

2016

2015

2015

2015

% Variance

% Variance

Rooms revenue (in thousands)

$         69,251

$                     -

$       69,251

$         54,497

$               12,566

$       67,063

27.07%

3.26%

RevPAR

$         192.56

$                     -

$       192.56

$         163.35

$               576.97

$       188.69

17.89%

2.05%

Occupancy

77.77%

-

77.77%

78.54%

80.87%

78.69%

(0.99%)

ADR

$         247.62

$                     -

$       247.62

$         207.97

$               713.44

$       239.81

19.07%

NOTES:

(1)

The above comparable information assumes the twelve hotel properties owned and included in the Company's operations at March 31, 2016, were owned as of the

beginning of each of the periods presented.

(2)

All pre-acquisition information was obtained from the prior owner. The Company performed a limited review of the information as part of its analysis of the acquisition. The financial statements for the Bardessono Hotel and Spa as of and for the six months ended June 30, 2015, were reviewed by independent auditors and were included in our Current Report on Form 8-K/A filed on February 3, 2016. The financial statements for the Ritz-Carlton St. Thomas as of and for the nine months ended September 30, 2015, were reviewed  by our auditors and were included in our Current Report on Form 8-K/A filed on February 26, 2016.

 ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES 

 HOTEL EBITDA 

 (dollars in thousands) 

 (unaudited) 

 ALL HOTELS: 

 Three Months Ended 

March 31,

2016

2015

 % Variance 

 Total hotel revenue 

$         99,764

$       77,749

28.32%

 Pre-acquisition adjustments 

-

20,163

(100.00%)

 Comparable total hotel revenue 

$         99,764

$       97,912

1.89%

 Hotel EBITDA 

$         29,442

$       23,523

25.16%

 Pre-acquisition adjustments 

-

4,491

(100.00%)

 Comparable Hotel EBITDA 

$         29,442

$       28,014

5.10%

 Hotel EBITDA Margin 

29.51%

30.26%

(0.74%)

 Comparable Hotel EBITDA Margin 

29.51%

28.61%

0.90%

 Hotel EBITDA adjustments attributable to consolidated noncontrolling interests 

$           1,760

$         1,676

5.01%

 Hotel EBITDA attributable to the Company and OP unitholders 

$         27,682

$       21,847

26.71%

 Comparable Hotel EBITDA attributable to the Company and OP unitholders 

$         27,682

$       26,338

5.10%

 NOTES: 

(1)

The above comparable information assumes the twelve hotel properties owned and included in the Company's operations at March 31, 2016 were owned as of the beginning of each of the periods presented.

(2)

All pre-acquisition information was obtained from the prior owner. The Company performed a limited review of the information as part of its analysis of the acquisition. The financial statements for the Bardessono Hotel and Spa as of and for the six months ended June 30, 2015, were reviewed by independent auditors and were included in our Current Report on Form 8-K/A filed on February 3, 2016. The financial statements for the Ritz-Carlton St. Thomas as of and for the nine months ended September 30, 2015, were reviewed  by our auditors and were included in our Current Report on Form 8-K/A filed on February 26, 2016.

Adjustments have been made to the pre-acquisition results as indicated below:

(a) Management fee expense was adjusted to reflect current contractual rates.

(b) Lease expense was adjusted to reflect additional expense from a below market rate ground lease on the Bardessono Hotel and Spa.

(3)

See Exhibit 1 for reconciliation of net income (loss) to hotel EBITDA.

ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

SELECTED FINANCIAL AND OPERATING INFORMATION BY PROPERTY

(in thousands, except operating information)

(unaudited)

THE FOLLOWING TABLE PRESENTS SELECTED FINANCIAL AND OPERATING INFORMATION BY PROPERTY FOR THE TWELVE HOTEL PROPERTIES INCLUDED IN THE COMPANY'S OPERATIONS AT MARCH 31, 2016:

Three Months Ended March 31,

Actual

Pre-acquisition

Comparable

Actual

Pre-acquisition 

Comparable

Actual

Comparable

2016

2016

2016

2015

2015

2015

% Variance

% Variance

CAPITAL HILTON WASHINGTON DC

Selected Financial Information:

Rooms Revenue

$         9,226

$                      -

$       9,226

$         8,374

$                    -

$       8,374

10.17%

10.17%

Total Hotel Revenue 

$       13,766

$                      -

$     13,766

$       13,239

$                    -

$     13,239

3.98%

3.98%

Hotel EBITDA

$         3,615

$                      -

$       3,615

$         3,103

$                    -

$       3,103

16.50%

16.50%

Hotel EBITDA Margin

26.26%

-

26.26%

23.44%

-

23.44%

2.82%

2.82%

Selected Operating Information:

RevPAR

$      184.35

$                      -

$     184.35

$      170.10

$                    -

$     170.10

8.38%

8.38%

Occupancy

81.45%

-

81.45%

78.00%

-

78.00%

4.43%

4.43%

ADR

$      226.32

$                      -

$     226.32

$      218.08

$                    -

$     218.08

3.78%

3.78%

LA JOLLA HILTON TORREY PINES

Selected Financial Information:

Rooms Revenue

$         5,824

$                      -

$       5,824

$         5,882

$                    -

$       5,882

(0.99%)

(0.99%)

Total Hotel Revenue 

$       10,839

$                      -

$     10,839

$       10,803

$                    -

$     10,803

0.33%

0.33%

Hotel EBITDA

$         3,425

$                      -

$       3,425

$         3,600

$                    -

$       3,600

(4.86%)

(4.86%)

Hotel EBITDA Margin

31.60%

-

31.60%

33.32%

-

33.32%

(1.73%)

(1.73%)

Selected Operating Information:

RevPAR

$      162.44

$                      -

$     162.44

$       165.89

$                    -

$     165.89

(2.08%)

(2.08%)

Occupancy

77.94%

-

77.94%

83.21%

-

83.21%

(6.33%)

(6.33%)

ADR

$      208.42

$                      -

$     208.42

$       199.37

$                    -

$     199.37

4.54%

4.54%

CHICAGO SOFITEL WATER TOWER

Selected Financial Information:

Rooms Revenue

$         3,618

$                      -

$       3,618

$          3,857

$                    -

$       3,857

(6.20%)

(6.20%)

Total Hotel Revenue 

$         5,260

$                      -

$       5,260

$          5,624

$                    -

$       5,624

(6.47%)

(6.47%)

Hotel EBITDA

$          (723)

$                      -

$        (723)

$           (611)

$                    -

$        (611)

(18.33%)

(18.33%)

Hotel EBITDA Margin

(13.75%)

-

(13.75%)

(10.86%)

-

(10.86%)

(2.88%)

(2.88%)

Selected Operating Information:

RevPAR

$         95.80

$                      -

$       95.80

$       103.26

$                    -

$     103.26

(7.23%)

(7.23%)

Occupancy

65.07%

-

65.07%

66.24%

-

66.24%

(1.77%)

(1.77%)

ADR

$       147.23

$                      -

$     147.23

$       155.89

$                    -

$     155.89

(5.55%)

(5.55%)

BARDESSONO HOTEL AND SPA

Selected Financial Information:

Rooms Revenue

$         2,290

$                      -

$        2,290

$             -

$                2,160

$       2,160

0.00%

6.02%

Total Hotel Revenue 

$         3,452

$                      -

$        3,452

$             -

$                3,253

$       3,253

0.00%

6.12%

Hotel EBITDA

$              85

$                      -

$             85

$             -

$                 (308)

$        (308)

0.00%

127.60%

Hotel EBITDA Margin

2.46%

-

2.46%

-

(9.47%)

(9.47%)

0.00%

11.93%

Selected Operating Information:

RevPAR

$      405.89

$                      -

$      405.89

$             -

$             387.21

$     387.21

0.00%

4.83%

Occupancy

75.31%

-

75.31%

0.00%

72.71%

72.71%

0.00%

3.58%

ADR

$      538.96

$                      -

$      538.96

$             -

$             532.57

$     532.57

0.00%

1.20%

KEY WEST PIER HOUSE RESORT

Selected Financial Information:

Rooms Revenue

$         5,844

$                      -

$       5,844

$         5,734

$                    -

$       5,734

1.92%

1.92%

Total Hotel Revenue 

$         7,072

$                      -

$       7,072

$         6,954

$                    -

$       6,954

1.70%

1.70%

Hotel EBITDA

$         3,668

$                      -

$       3,668

$         3,502

$                    -

$       3,502

4.74%

4.74%

Hotel EBITDA Margin

51.87%

-

51.87%

50.36%

-

50.36%

1.51%

1.51%

Selected Operating Information:

RevPAR

$      452.26

$                      -

$     452.26

$      448.66

$                    -

$     448.66

0.80%

0.80%

Occupancy

92.87%

-

92.87%

93.47%

-

93.47%

(0.64%)

(0.64%)

ADR

$      486.97

$                      -

$     486.97

$      479.98

$                    -

$     479.98

1.46%

1.46%

PHILADELPHIA COURTYARD DOWNTOWN

Selected Financial Information:

Rooms Revenue

$         5,065

$                      -

$       5,065

$         5,311

$                    -

$       5,311

(4.63%)

(4.63%)

Total Hotel Revenue 

$         6,265

$                      -

$       6,265

$         6,548

$                    -

$       6,548

(4.32%)

(4.32%)

Hotel EBITDA

$         1,697

$                      -

$       1,697

$         1,979

$                    -

$       1,979

(14.25%)

(14.25%)

Hotel EBITDA Margin

27.09%

-

27.09%

30.22%

-

30.22%

(3.14%)

(3.14%)

Selected Operating Information:

RevPAR

$      111.54

$                      -

$     111.54

$      118.27

$                    -

$     118.27

(5.69%)

(5.69%)

Occupancy

75.31%

-

75.31%

76.82%

-

76.82%

(1.97%)

(1.97%)

ADR

$      148.10

$                      -

$     148.10

$      153.95

$                    -

$     153.95

(3.80%)