Ashford Hospitality Trust Inc.
08/14/2025 | Press release | Distributed by Public on 08/14/2025 14:42
Quarterly Report for Quarter Ending June 30, 2025 (Form 10-Q)
MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
FORWARD-LOOKING STATEMENTS
The following discussion should be read in conjunction with the unaudited financial statements and notes thereto appearing elsewhere herein. This report contains forward-looking statements within the meaning of the federal securities laws. Ashford Hospitality Trust, Inc. ("the Company," "we," "our" or "us") cautions investors that any forward-looking statements presented herein, or which management may express orally or in writing from time to time, are based on management's beliefs and assumptions at that time.
Throughout this Form 10-Q, we make forward-looking statements that are subject to risks and uncertainties. Forward-looking statements are generally identifiable by use of forward-looking terminology such as "may," "will," "should," "potential," "intend," "expect," "anticipate," "estimate," "approximately," "believe," "could," "project," "predict" or other similar words or expressions. Additionally, statements regarding the following subjects are forward-looking by their nature:
•our business and investment strategy;
•anticipated or expected purchases, sales or dispositions of assets;
•our projected operating results;
•completion of any pending transactions;
•our ability to restructure existing property-level indebtedness;
•our ability to secure additional financing to enable us to operate our business;
•our understanding of our competition;
•projected capital expenditures; and
•the impact of technology on our operations and business.
Such forward-looking statements are based on our beliefs, assumptions, and expectations of our future performance, taking into account all information currently known to us. These beliefs, assumptions and expectations can change as a result of many potential events or factors, not all of which are known to us. If a change occurs, our business, financial condition, liquidity, results of operations, plans and other objectives may vary materially from those expressed in our forward-looking statements. You should carefully consider this risk when you make an investment decision concerning our securities. Additionally, the following factors could cause actual results to vary from our forward-looking statements:
•factors discussed in our Form 10-K for the year ended December 31, 2024, as filed with the Securities and Exchange Commission ("SEC") on March 21, 2025, including those set forth under the sections titled "Risk Factors," "Management's Discussion and Analysis of Financial Condition and Results of Operations," "Business," and "Properties," as supplemented by our subsequent Quarterly Reports on Form 10-Q and other filings under the Exchange Act;
•changes in interest rates and inflation;
•macroeconomic conditions, such as a prolonged period of weak economic growth and volatility in capital markets;
•uncertainty in the banking sector and market volatility;
•catastrophic events or geopolitical conditions, such as the conflict between Russia and Ukraine, the Israel-Hamas war and changes to tariffs or trade policies;
•extreme weather conditions, which may cause property damage or interrupt business;
•actions by the lenders to foreclose on our assets that are pledged as collateral;
•general volatility of the capital markets and the market price of our common and preferred stock;
•general and economic business conditions affecting the lodging and travel industry;
•changes in our business or investment strategy;
•availability, terms and deployment of capital;
•our ability to raise capital on terms favorable to us and in a timely manner;
•unanticipated increases in financing and other costs;
•changes in our industry and the market in which we operate and local economic conditions;
•the degree and nature of our competition;
•actual and potential conflicts of interest with Ashford Hospitality Advisors LLC ("Ashford LLC"), Remington Lodging & Hospitality, LLC ("Remington Hospitality"), Premier Project Management LLC ("Premier"), Braemar Hotels & Resorts Inc. ("Braemar"), Stirling Hotels & Resorts, Inc. ("Stirling Inc."), our executive officers and our non-independent directors;
•changes in personnel of Ashford LLC or the lack of availability of qualified personnel;
•changes in governmental regulations, accounting rules, tax rates and similar matters;
•legislative and regulatory changes, including changes to the Internal Revenue Code of 1986, as amended (the "Code"), and related rules, regulations and interpretations governing the taxation of real estate investment trusts ("REITs"), including impacts from the One Big Beautiful Bill Act;
•limitations imposed on our business and our ability to satisfy complex rules in order for us to qualify as a REIT for U.S. federal income tax purposes; and
•future sales and issuances of our common stock or other securities which might result in dilution and could cause the price of our common stock to decline or cause our common stock to be delisted from the NYSE.
When considering forward-looking statements, you should keep in mind the matters summarized under "Item 1A. Risk Factors" in Part I of our 2024 Form 10-K filed on March 21, 2025, and this Quarterly Report, and the discussion in this Management's Discussion and Analysis of Financial Condition and Results of Operations, could cause our actual results and performance to differ significantly from those contained in our forward-looking statements. Accordingly, we cannot guarantee future results or performance. Readers are cautioned not to place undue reliance on any of these forward-looking statements, which reflect our views as of the date of this Quarterly Report. Furthermore, we do not intend to update any of our forward-looking statements after the date of this Quarterly Report to conform these statements to actual results and performance, except as may be required by applicable law.
EXECUTIVE OVERVIEW
General
As of June 30, 2025, our portfolio consisted of 67 consolidated operating hotel properties, which represent 16,736 total rooms. One consolidated operating hotel property, which represents 188 total rooms is owned through a 29.3% investment in a consolidated entity. Additionally, our portfolio consists of four consolidated operating hotel properties, which represent 405 total rooms owned through a 98.7% ownership interest in Stirling OP, which was formed by Stirling Inc. to acquire and own a diverse portfolio of stabilized income-producing hotels and resorts. Currently, all of our hotel properties are located in the United States.
Based on our primary business objectives and forecasted operating conditions, our current key priorities and financial strategies include, among other things:
•preserving capital and maintaining significant cash and cash equivalents liquidity;
•disposition of non-core hotel properties;
•acquisition of hotel properties, in whole or in part, that we expect will be accretive to our portfolio;
•pursuing capital market activities and implementing strategies to enhance long-term stockholder value;
•accessing cost effective capital, including through the issuance of non-traded preferred securities;
•opportunistically exchanging preferred stock into common stock;
•implementing selective capital improvements designed to increase profitability and maintain the quality of our assets;
•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;
•utilizing hedges, derivatives and other strategies to mitigate risks;
•pursuing opportunistic value-add additions to our hotel portfolio; and
•making other investments or divestitures that our board of directors deems appropriate.
Our current investment strategy is to focus on owning predominantly full-service hotels in the upper upscale segment in domestic markets that have RevPAR generally less than twice the national average. We believe that as supply, demand and capital market cycles change, we will be able to shift our investment strategy to take advantage of new lodging-related investment opportunities as they may develop. Our board of directors may change our investment strategy at any time without stockholder approval or notice. We will continue to seek ways to benefit from the cyclical nature of the hotel industry.
We are advised by Ashford LLC, a subsidiary of Ashford Inc., through an advisory agreement. All of the hotel properties in our portfolio are currently asset-managed by Ashford LLC. We do not have any employees. All of the services that might be provided by employees are provided to us by Ashford LLC.
We do not operate any of our hotel properties directly; instead we employ hotel management companies to operate them for us under management contracts. As of June 30, 2025, Remington Lodging & Hospitality, LLC ("Remington Hospitality"), a subsidiary of Ashford Inc., manages 50 of our 68 operating hotel properties and three of the four Stirling OP hotel properties. Third-party management companies manage the remaining hotel properties.
Ashford Inc. also provides other products and services to us or our hotel properties through certain entities in which Ashford Inc. has an ownership interest. These products and services include, but are not limited to, design and construction services, debt placement and related services, audiovisual services, real estate advisory and brokerage services, insurance policies covering general liability, workers' compensation and business automobile claims and insurance claims services, hypoallergenic premium rooms, watersport activities, broker-dealer and distribution services, mobile key technology and cash management services.
Mr. Monty J. Bennett, chairman and chief executive officer of Ashford Inc. and, together with his father, Mr. Archie Bennett, Jr. (the "Bennetts"), as of June 30, 2025, hold a controlling interest in Ashford Inc. The Bennetts owned approximately 809,937 shares of Ashford Inc. common stock, which represented an approximate 51.5% ownership interest in Ashford Inc., and owned 18,758,600 shares of Ashford Inc. Series D Convertible Preferred Stock, which, along with all unpaid accrued and accumulated dividends thereon, was convertible (at a conversion price of $117.50 per share) into an additional approximate 4,482,564 shares of Ashford Inc. common stock, which, if converted as of June 30, 2025, would have increased the Bennetts' ownership interest in Ashford Inc. to 87.4%. The 18,758,600 shares of Series D Convertible Preferred Stock owned by Mr. Monty J. Bennett and Mr. Archie Bennett, Jr. include 360,000 shares owned by trusts. Additionally, Mr. Monty J. Bennett acquired the right to direct votes, effective March 25, 2025, and as of June 30, 2025, those rights represented approximately 565,000 common shares.
Pursuant to the Contribution Agreement with Ashford Securities, we, our Advisor and other entities advised by our Advisor contribute capital to Ashford Securities to fund a portion of its operations. Ashford Securities currently distributes our Series J Preferred Stock and Series K Preferred Stock, Stirling Inc. private offering of its common stock and interests in private funds sponsored by our Advisor. As of June 30, 2025, we owned 98.7%of the equity interests in Stirling REIT OP, LP, Stirling Inc.'s operating partnership. Through our contributions to Ashford Securities we may pay or be deemed to have paid sales-based compensation to Ashford Securities personnel of up to 1.25% of the gross amount of Stirling Inc. common stock sold by them.
For additional detail regarding the relationships among the Company, Ashford Securities, the Company's Advisor and its affiliates, and other entities advised by the Advisor, please see the section titled "Certain Relationships and Related Person Transactions" in the Company's 2024 Annual Proxy Statement and any current or annual report, prospectus supplement, or proxy statement filed by the Company with the SEC at www.sec.gov.
Recent Developments
On April 14, 2025, the Company successfully extended its Morgan Stanley Pool mortgage loan secured by 17 hotels. The loan had an original final maturity date in November of 2024. The extension provides for an initial maturity in March of 2026 and two one-year extension options, subject to the satisfaction of certain conditions, with a final maturity date in March of 2028. The loan has a current balance of $409.8 million and continues to bear interest at a floating rate of SOFR + 3.39%.
On April 14, 2025, the Residence Inn Orlando sold a parcel of land for $7.2 million, net of selling expenses, resulting in a recognized gain of $6.7 million. This gain is reported within "gain (loss) on consolidation of VIE and disposition of assets and hotel properties" in the Company's consolidated statements of operations.
On May 8, 2025, the Company received $35.0 million in return for an equity investment in a hotel property. The holder is entitled to a preferred return of 14.0% per annum. The investment is mandatorily redeemable on May 10, 2029.
On May 12, 2025, the Company and Ashford LLC entered into Amendment No. 4 to the Advisory Agreement (the "Fourth Amendment"). The Fourth Amendment further extends the updates made by the Third Amendment to the outside date for which any sale or disposition of any of the Company's Highland loan portfolio and JPM8 hotel properties securing the associated mortgage loans following certain defaults (as described in the Advisory Agreement) would be excluded from the numerator of the calculation of the percentage of gross book value of the Company's assets sold or disposed (but, for the avoidance of doubt, included in the denominator of such calculation) for purposes of determining whether a Company Change of Control (as defined in the Advisory Agreement) has occurred, from March 31, 2026 to May 31, 2026.
On May 23, 2025, the Company signed a definitive agreement to sell the 242-room Hilton Houston NASA Clear Lake located in Houston, Texas for $27.0 million.
On May 31, 2025, the Company signed a definitive agreement to sell the 78-room Residence Inn Evansville located in Evansville, Indiana. The sale was completed August 11, 2025 for $6.0 million, subject to customary pro rations and adjustments.
On July 4, 2025, the One Big Beautiful Bill Act ("OBBBA") was enacted in the U.S. The OBBBA includes significant provisions, such as the permanent extension of certain expiring provisions of the Tax Cuts and Jobs Act, modifications to the international tax framework and the restoration of favorable tax treatment for certain business provisions. The legislation has multiple effective dates, with certain provisions effective in 2025 and others implemented through 2027. We are currently assessing the full effects of the legislation on our effective tax rate and cash tax position, but the changes resulting from the tax provisions in the OBBBA are not expected to have a material impact on our consolidated financial statements.
On July 30, 2025, the Company extended its Highland mortgage loan secured by 18 hotels with an original maturity date of April 2025. Terms of the amendment included a $10.0 million principal paydown, extending the maturity date to January 9, 2026. The loan is subject to a six-month extension option to July 9, 2026, upon satisfaction of certain conditions, and bears interest at a floating rate of SOFR + 4.13%.
On August 14, 2025, the Company and Ashford LLC entered into the Fifth Amendment. The Fifth Amendment extends the outside date for which any sale or disposition of any of the Company's Highland Portfolio and JPM8 hotel properties securing the associated mortgage loans following an event of default (as defined in the Advisory Agreement) would be excluded from the numerator of the calculation of the percentage of gross book value of the Company's assets sold or disposed (but, for the avoidance of doubt, included in the denominator of such calculation) for purposes of determining whether a Company Change of Control (as defined in the Advisory Agreement) has occurred, from May 31, 2026 to August 15, 2026.
On August 14, 2025, Ashford Trust OP executed the Promissory Note with Ashford LLC allowing Ashford Trust OP to draw up to $20 million in cash through August 15, 2026 to fund Permitted Costs (as defined in the Promissory Note). Funds advanced under the Promissory Note bear interest at an annual rate of 10.0% which may be paid in cash or paid in-kind at Ashford OP's discretion. The maturity date of the Promissory Note is August 15, 2026, at which time all principal drawn upon and outstanding interest are due and payable. As collateral to secure the repayment of any amounts advanced by Ashford LLC under the Promissory Note, the Company pledged to Ashford LLC the Company's equity in Ashford Trust OP subject to Ashford LLC's filing of a financing statement in the appropriate jurisdiction.
RESULTS OF OPERATIONS
Key Indicators of Operating Performance
We use a variety of operating and other information to evaluate the operating performance of our business. These key indicators include financial information that is prepared in accordance with GAAP as well as other financial measures that are non-GAAP measures. In addition, we use other information that may not be financial in nature, including statistical information and comparative data. We use this information to measure the operating performance of our individual hotels, groups of hotels and/or business as a whole. We also use these metrics to evaluate the hotels in our portfolio and potential acquisitions to determine each hotel's contribution to cash flow and its potential to provide attractive long-term total returns. These key indicators include:
•Occupancy-Occupancy means the total number of hotel rooms sold in a given period divided by the total number of rooms available. Occupancy measures the utilization of our hotels' available capacity. We use occupancy to measure demand at a specific hotel or group of hotels in a given period.
•ADR-ADR means average daily rate and is calculated by dividing total hotel rooms revenues by total number of rooms sold in a given period. ADR measures average room price attained by a hotel and ADR trends provide useful information concerning the pricing environment and the nature of the customer base of a hotel or group of hotels. We use ADR to assess the pricing levels that we are able to generate.
•RevPAR-RevPAR means revenue per available room and is calculated by multiplying ADR by the average daily occupancy. RevPAR is one of the commonly used measures within the hotel industry to evaluate hotel operations. RevPAR does not include revenues from food and beverage sales or parking, telephone or other non-rooms revenues generated by the property. Although RevPAR does not include these ancillary revenues, it is generally considered the leading indicator of core revenues for many hotels. We also use RevPAR to compare the results of our hotels between periods and to analyze results of our comparable hotels (comparable hotels represent hotels we have owned for the entire period). RevPAR improvements attributable to increases in occupancy are generally accompanied by increases
in most categories of variable operating costs. RevPAR improvements attributable to increases in ADR are generally accompanied by increases in limited categories of operating costs, such as management fees and franchise fees.
RevPAR changes that are primarily driven by changes in occupancy have different implications for overall revenues and profitability than changes that are driven primarily by changes in ADR. For example, an increase in occupancy at a hotel would lead to additional variable operating costs (including housekeeping services, utilities and room supplies) and could also result in increases in other operating department revenues and expenses. Changes in ADR typically have a greater impact on operating margins and profitability as they do not have a substantial effect on variable operating costs.
Occupancy, ADR and RevPAR are commonly used measures within the lodging industry to evaluate operating performance. RevPAR is an important statistic for monitoring operating performance at the individual hotel level and across our entire business. We evaluate individual hotel RevPAR performance on an absolute basis with comparisons to budget and prior periods, as well as on a regional and company-wide basis. ADR and RevPAR include only rooms revenue. Rooms revenue is dictated by demand (as measured by occupancy), pricing (as measured by ADR) and our available supply of hotel rooms.
We also use funds from operations ("FFO"), Adjusted FFO, earnings before interest, taxes, depreciation and amortization for real estate ("EBITDAre") and Adjusted EBITDAre as measures of the operating performance of our business. See "Non-GAAP Financial Measures."
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, 2025 and 2024 (in thousands):
| Three Months Ended June 30, | Favorable (Unfavorable) Change | Six Months Ended June 30, |
Favorable (Unfavorable) Change |
||||||||||||||||||||||||||||||||
| 2025 | 2024 | 2025 to 2024 | 2025 | 2024 | 2025 to 2024 | ||||||||||||||||||||||||||||||
| Total revenue | $ | 302,001 | $ | 316,482 | $ | (14,481) | $ | 579,360 | $ | 620,378 | $ | (41,018) | |||||||||||||||||||||||
| Total hotel expenses | (198,830) | (207,445) | 8,615 | (387,304) | (418,332) | 31,028 | |||||||||||||||||||||||||||||
| Property taxes, insurance and other | (16,234) | (16,846) | 612 | (32,283) | (34,273) | 1,990 | |||||||||||||||||||||||||||||
| Depreciation and amortization | (35,276) | (37,187) | 1,911 | (72,615) | (77,731) | 5,116 | |||||||||||||||||||||||||||||
| Impairment charges | (1,447) | - | (1,447) | (1,447) | - | (1,447) | |||||||||||||||||||||||||||||
| Advisory service fee | (12,017) | (11,474) | (543) | (23,562) | (26,675) | 3,113 | |||||||||||||||||||||||||||||
| Corporate, general and administrative | (5,485) | (7,194) | 1,709 | (9,817) | (15,403) | 5,586 | |||||||||||||||||||||||||||||
| Gain (loss) on consolidation of VIE and disposition of assets and hotel properties | 6,684 | 87,441 | (80,757) | 38,552 | 94,397 | (55,845) | |||||||||||||||||||||||||||||
|
Gain (loss) on derecognition of assets
|
9,900 | 11,725 | (1,825) | 19,946 | 145,634 | (125,688) | |||||||||||||||||||||||||||||
| Operating income (loss) | 49,296 | 135,502 | (86,206) | 110,830 | 287,995 | (177,165) | |||||||||||||||||||||||||||||
| Equity in earnings (loss) of unconsolidated entities | 44 | (162) | 206 | (387) | (695) | 308 | |||||||||||||||||||||||||||||
| Interest income | 1,253 | 1,688 | (435) | 2,467 | 3,672 | (1,205) | |||||||||||||||||||||||||||||
| Other income (expense) | - | 37 | (37) | - | 72 | (72) | |||||||||||||||||||||||||||||
| Interest expense and amortization of discounts and loan costs | (70,687) | (68,416) | (2,271) | (137,489) | (142,377) | 4,888 | |||||||||||||||||||||||||||||
|
Interest expense associated with hotels in receivership
|
(9,902) | (11,944) | 2,042 | (19,948) | (24,042) | 4,094 | |||||||||||||||||||||||||||||
| Write-off of premiums, loan costs and exit fees | (1,486) | (3,796) | 2,310 | (6,083) | (3,814) | (2,269) | |||||||||||||||||||||||||||||
| Gain (loss) on extinguishment of debt | (2) | - | (2) | (15) | 45 | (60) | |||||||||||||||||||||||||||||
| Realized and unrealized gain (loss) on derivatives | (836) | 1,357 | (2,193) | (3,576) | 6,118 | (9,694) | |||||||||||||||||||||||||||||
| Income tax benefit (expense) | (119) | (3,455) | 3,336 | (436) | (3,758) | 3,322 | |||||||||||||||||||||||||||||
| Net income (loss) | (32,439) | 50,811 | (83,250) | (54,637) | 123,216 | (177,853) | |||||||||||||||||||||||||||||
| (Income) loss from consolidated entities attributable to noncontrolling interests | 1,412 | 8 | 1,404 | 3,188 | 17 | 3,171 | |||||||||||||||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | 631 | (565) | 1,196 | 1,082 | (1,418) | 2,500 | |||||||||||||||||||||||||||||
| Net income (loss) attributable to the Company | $ | (30,396) | $ | 50,254 | $ | (80,650) | $ | (50,367) | $ | 121,815 | $ | (172,182) | |||||||||||||||||||||||
All hotel properties held during the three and six months ended June 30, 2025 and 2024 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, 2025 and 2024. 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:
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Hotel Properties
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Location
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Type | Date | |||||||||||||||||
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Courtyard Columbus Tipton Lakes (2)
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Columbus, IN
|
Derecognized
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March 1, 2024 | |||||||||||||||||
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Courtyard Old Town (2)
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Scottsdale, AZ
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Derecognized
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March 1, 2024 | |||||||||||||||||
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Residence Inn Hughes Center (2)
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Las Vegas, NV
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
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Residence Inn Phoenix Airport (2)
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Phoenix, AZ
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
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Residence Inn San Jose Newark (2)
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Newark, CA
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
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SpringHill Suites Manhattan Beach (2)
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Hawthorne, CA
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
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SpringHill Suites Plymouth Meeting (2)
|
Plymouth Meeting, PA
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
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Courtyard Basking Ridge (2)
|
Basking Ridge, NJ
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
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Courtyard Newark Silicon Valley (2)
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Newark, CA
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
|
Courtyard Oakland Airport (2)
|
Oakland, CA
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
|
Courtyard Plano Legacy Park (2)
|
Plano, TX
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
|
Residence Inn Plano (2)
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Plano, TX
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
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SpringHill Suites BWI Airport (2)
|
Baltimore, MD
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
|
TownePlace Suites Manhattan Beach (2)
|
Hawthorne, CA
|
Derecognized
|
March 1, 2024 | |||||||||||||||||
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Residence Inn Salt Lake City (1)
|
Salt Lake City, UT | Disposition | March 6, 2024 | |||||||||||||||||
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Hilton Boston Back Bay (1)
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Boston, MA
|
Disposition | April 9, 2024 | |||||||||||||||||
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Hampton Inn Lawrenceville (1)
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Lawrenceville, GA
|
Disposition | April 23, 2024 | |||||||||||||||||
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Courtyard Manchester (1)
|
Manchester, CT
|
Disposition | May 30, 2024 | |||||||||||||||||
|
SpringHill Suites Kennesaw (1)
|
Kennesaw, GA
|
Disposition | June 10, 2024 | |||||||||||||||||
|
Fairfield Inn Kennesaw (1)
|
Kennesaw, GA
|
Disposition | June 10, 2024 | |||||||||||||||||
|
One Ocean (1)
|
Atlantic Beach, FL
|
Disposition | June 27, 2024 | |||||||||||||||||
|
The Ashton (1)
|
Fort Worth, TX
|
Disposition | July 17, 2024 | |||||||||||||||||
|
Le Méridien Fort Worth
|
Fort Worth, TX
|
Developed
|
August 29, 2024 | |||||||||||||||||
|
Courtyard Boston (1)
|
Boston, MA
|
Disposition | January 10, 2025 | |||||||||||||||||
____________________________________
(1) Referred to as "Hotel Dispositions."
(2) Referred to as "KEYS A and B properties."
The following table illustrates the key performance indicators of the operating hotel properties included in our results of operations:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| RevPAR (revenue per available room) | $ | 144.08 | $ | 149.34 | $ | 138.09 | $ | 136.63 | |||||||||||||||
| Occupancy | 75.23 | % | 74.87 | % | 71.62 | % | 70.65 | % | |||||||||||||||
| ADR (average daily rate) | $ | 191.51 | $ | 199.48 | $ | 192.80 | $ | 193.39 | |||||||||||||||
The following table illustrates the key performance indicators of the 67 comparable hotel properties and fourconsolidated Stirling OP properties that were included in our results of operations for the full three and six months ended June 30, 2025 and 2024, respectively:
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| RevPAR | $ | 144.83 | $ | 147.98 | $ | 138.85 | $ | 138.29 | |||||||||||||||
| Occupancy | 75.14 | % | 74.78 | % | 71.51 | % | 71.01 | % | |||||||||||||||
| ADR | $ | 192.74 | $ | 197.90 | $ | 194.16 | $ | 194.75 | |||||||||||||||
Comparison of the Three Months Ended June 30, 2025 and 2024
Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $80.7 million, from net income of $50.3 million for the three months ended June 30, 2024 (the "2024 quarter") to a net loss of $30.4 million for the three months ended June 30, 2025 (the "2025 quarter") as a result of the factors discussed below.
Revenue. Rooms revenue from our hotel properties decreased $16.4 million, or 6.7%, to $227.2 million in the 2025 quarter compared to the 2024 quarter. This decrease in the 2025 quarter is attributable to a decrease of $14.2 million from our Hotel Dispositions, and $4.8 million from our comparable hotel properties. These decreases were partially offset by higher rooms revenue of $2.3 million from the Le Méridien that opened in August 2024 (the "Le Méridien Opening") and $190,000 from the Stirling hotel properties. Our comparable hotel properties experienced an decrease of 2.6% in room rates and a 36 basis point increase in occupancy.
Food and beverage revenue increased $76,000, or 0.1%, to $55.3 million in the 2025 quarter compared to the 2024 quarter. This increase in the 2025 quarter is primarily attributable to increased revenue of $2.2 million and $418,000 at our comparable hotel properties and the Le Méridien Opening, respectively. These increases were partially offset by a decrease of food and beverage sales of $2.5 million from our Hotel Dispositions.
Other hotel revenue, which consists mainly of internet access, parking, and spa revenue, increased $2.1 million, or 12.2%, to $19.0 million in the 2025 quarter compared to the 2024 quarter. This increase is primarily attributable to an increase of $3.5 million at our comparable hotel properties. The increase was partially offset by a decrease of $1.6 million from our Hotel Dispositions. Other non-hotel revenue decreased $227,000, or 33.2%, to $456,000 in the 2025 quarter as compared to the 2024 quarter.
Hotel Operating Expenses. Hotel operating expenses decreased $8.6 million, or 4.2%, to $198.8 million in the 2025 quarter compared to the 2024 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 $4.8 million in the 2025 quarter as compared to the 2024 quarter, comprising a decrease of $5.7 million from our Hotel Dispositions. The decrease in direct expenses was partially offset by an increase of $916,000 from the Le Méridien Opening in the 2025 quarter. Direct expenses were 29.7% of total hotel revenue for the 2025 quarter and 29.9% for the 2024 quarter.
Indirect expenses and management fees decreased $3.8 million in the 2025 quarter as compared to the 2024 quarter, comprising a decrease of $6.1 million from our Hotel Dispositions. The decrease in the 2025 quarter was partially offset by an increase of $1.0 million from our comparable hotel properties and $1.0 million from the Le Méridien Opening.
Property Taxes, Insurance and Other. Property taxes, insurance and other expense decreased $612,000, or 3.6%, to $16.2 million during the 2025 quarter compared to the 2024 quarter. The decrease in the 2025 quarter was primarily due to a decrease of $1.2 million from our Hotel Dispositions. The decrease in the 2025 quarter was partially offset by increases of $461,000 from the Le Méridien Opening and $151,000 from our comparable hotel properties.
Depreciation and Amortization. Depreciation and amortization decreased $1.9 million, or 5.1%, to $35.3 million during the 2025 quarter compared to the 2024 quarter. The decrease in the 2025 quarter was primarily due to decreases of $1.3 million from our Hotel Dispositions, $1.6 million from our comparable hotel properties and $143,000 from our Stirling properties. The decrease in the 2025 quarter was partially offset by an increase of $1.1 million from the Le Méridien Opening.
Impairment Charges.Impairment charges were $1.4 million in the 2025 quarter. We recorded an impairment charge of $1.4 million at the Residence Inn Evansville as a result of reduced estimated cash flows resulting from the sale of the property in August 2025.
Advisory Services Fee. Advisory services fee increased $543,000, or 4.7%, to $12.0 million in the 2025 quarter compared to the 2024 quarter. The advisory services fee represents fees incurred in connection with the advisory agreement between Ashford Inc. and the Company and between Ashford Inc. and Stirling OP. In the 2025 quarter, the advisory services fee was comprised a base advisory fee of $8.2 million, equity-based compensation of $222,000 awarded to the officers and employees of Ashford Inc., reimbursable expenses of $3.3 million and fees totaling $306,000 associated with the Stirling OP's advisory agreement. In the 2024 quarter, the advisory services fee comprised a base advisory fee of $8.0 million, equity-based compensation of $507,000 awarded to the officers and employees of Ashford Inc., reimbursable expenses of $2.7 million and fees totaling $238,000 associated with Stirling OP's advisory agreement.
Corporate, General and Administrative. Corporate, general and administrative expense decreased $1.7 million from $7.2 million in the 2024 quarter to $5.5 million in the 2025 quarter. The decrease was primarily attributable to decreases in legal and professional costs of $1.9 million, miscellaneous expenses of $306,000 and public company costs of $135,000. The decrease in the 2025 quarter was partially offset by an increase in reimbursements of Ashford Securities' operating costs of $593,000.
Gain (Loss) on Consolidation of VIE and Disposition of Assets and Hotel Properties. Gain on consolidation of VIE and disposition of assets and hotel properties decreased $80.8 million from $87.4 million in the 2024 quarter to $6.7 million in the 2025 quarter. The gain in the 2025 quarter was primarily related to a gain of $6.7 million on the sale of a parcel of land previously owned by our Residence Inn Orlando property in April 2025. The gain in the 2024 quarter primarily related to the sale of six of our hotel properties in the 2024 quarter.
Gain (Loss) on Derecognition of Assets.Gain on derecognition of assets decreased $1.8 million from $11.7 million in the 2024 quarter to $9.9 million in the 2025 quarter. The gain primarily represents the increase of the contract asset on our consolidated balance sheets. We record a contract asset associated with the accrued interest expense from the default of the KEYS A and KEYS B loans as we expect to be released from this obligation upon final resolution with the lender. The gain in the 2025 quarter primarily relates to accrued interest on the KEYS A and B properties in receivership and the transfer of the SpringHill Suites BWI Airport to a third-party purchaser in June of 2025. The gain in the 2024 quarter primarily relates to accrued interest on the KEYS A and B properties in receivership. See note 7 to our consolidated financial statements.
Equity in Earnings (Loss) of Unconsolidated Entities. Equity in earnings (loss) of unconsolidated entities changed $206,000 from a loss of $162,000 during the 2024 quarter to earnings of $44,000 during the 2025 quarter. Equity in earnings (loss) primarily results from our investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage in Napa, California.
Interest Income. Interest income was $1.3 million and $1.7 million for the 2025 quarter and the 2024 quarter, respectively. The decrease in interest income in the 2025 quarter was primarily attributable to lower excess cash balances in the 2025 quarter compared to the 2024 quarter.
Other Income (Expense). Other income consisted of miscellaneous income of $0 in the 2025 quarter and $37,000 in the 2024 quarter.
Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs increased $2.3 million, or 3.3%, to $70.7 million during the 2025 quarter compared to the 2024 quarter. The increase is primarily due to $6.2 million from higher default interest and late charges recorded on a mortgage loan in default. Other increases include higher interest expense and amortization of discounts and loan costs of $2.9 million at our comparable hotel properties, primarily driven by refinancing activity and loan modifications and a $1.1 million increase from the Le Méridien Opening. These increases were partially offset by a $3.9 million decrease due to paying off the Oaktree loan in February 2025 and a $4.0 million decrease from our Hotel Dispositions. The average SOFR rates for the 2025 quarter and the 2024 quarter were 4.33% and 5.33%, respectively.
Interest Expense Associated with Hotels in Receivership. Interest expense associated with hotels in receivership decreased $2.0 million, from $11.9 million in 2024 quarter to $9.9 million in the 2025 quarter. The decrease is due is primarily due to lower interest rates in the 2025 quarter and the transfer of the SpringHill Suites BWI Airport to a third-party purchaser in June of 2025. See note 7 to our consolidated financial statements.
Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees decreased $2.3 million to $1.5 million in the 2025 quarter compared to the 2024 quarter. In the 2025 quarter, we incurred fees of $1.5 million related to loan refinances and modifications. In the 2024 quarter, we incurred fees of $3.0 million related to loan refinances and modifications and $796,000 in write-offs in unamortized loan costs.
Gain (Loss) on Extinguishment of Debt. Gain on extinguishment of debt in the 2025 quarter was $2,000.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain (loss) on derivatives changed $2.2 million from a $1.4 million gain in the 2024 quarter to an $836,000 loss in the 2025 quarter. In the 2025 quarter, we recognized net unrealized losses of $1.3 million on our derivatives. These unrealized losses were partially offset by net realized gains of $473,000 related to payments from counterparties on interest rate caps.
In the 2024 quarter, we recognized a realized gain of $7.4 million related to payments from counterparties on interest rate caps. These gains were partially offset by unrealized losses of $6.0 million primarily associated with interest rate caps.
Income Tax (Expense) Benefit. Income tax (expense) benefit changed $3.3 million, from an expense of $3.5 million in the 2024 quarter to an expense of $119,000 in the 2025 quarter. This decrease was primarily due to a decrease in current state taxes in the 2025 quarter compared to the 2024 quarter.
(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Our noncontrolling interest partners in consolidated entities were allocated a loss of $1.4 million in the 2025 quarter and $8,000 in the 2024 quarter. At June 30, 2025, noncontrolling interests in consolidated entities represented an ownership interest of 70.7% in 815 Commerce MM and 1.30% in Stirling OP. See notes 1 and 2 to our consolidated financial statements.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $631,000 in the 2025 quarter and net income of $565,000 in the 2024 quarter. Redeemable noncontrolling interests represented ownership interests of 1.56% and 1.26% in the operating partnership at June 30, 2025 and 2024, respectively.
Comparison of the Six Months Ended June 30, 2025 and 2024
Net Income (Loss) Attributable to the Company. Net income (loss) attributable to the Company changed $172.2 million from net income of $121.8 million for the six months ended June 30, 2024 (the "2024 period") to a net loss of $50.4 million for the six months ended June 30, 2025 (the "2025 period") as a result of the factors discussed below.
Revenue. Rooms revenue from our hotel properties decreased $39.3 million, or 8.3%, to $433.5 million in the 2025 period compared to the 2024 period. This decrease in the 2025 period is primarily attributable to decreases in rooms revenue of $30.2 million from our Hotel Dispositions, $13.7 million from the KEYS A and B properties that went into receivership in the 2024 period and lower rooms revenue of $533,000 at our comparable hotel properties. These decreases were partially offset by $4.4 million in rooms revenue from the Le Méridien Opening and higher rooms revenue of $683,000 at the Stirling properties in the 2025 period. Our comparable hotel properties experienced a decrease of 0.3% in room rates and a increase of 50 basis points in occupancy.
Food and beverage revenue decreased $2.8 million, or 2.4%, to $109.9 million in the 2025 period compared to the 2024 period. This decrease in the 2025 period is primarily attributable to decreases in food and beverage revenue of $5.8 million from our Hotel Dispositions and $404,000 from the KEYS A and B properties. These decreases were partially offset by higher food and beverage revenue of $2.7 million at our comparable hotel properties and $819,000 from the Le Méridien Opening.
Other hotel revenue, which consists mainly of internet access, parking, and spa revenue, increased $1.6 million, or 4.8%, to $35.2 million in the 2025 period compared to the 2024 period. This increase in the 2025 period is primarily attributable to increases in other hotel revenue of $5.6 million from our comparable hotel properties and $314,000 from the Le Méridien Opening. These increases were partially offset by lower other hotel revenue of $3.9 million from our Hotel Dispositions and $488,000 from the KEYS A and B properties. Other revenue decreased $557,000, or 42.1%, to $765,000 in the 2025 period compared to the 2024 period.
Hotel Operating Expenses. Hotel operating expenses decreased $31.0 million, or 7.4%, to $387.3 million in the 2025 period compared to the 2024 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 $14.2 million in the 2025 period compared to the 2024 period, comprising a decrease of $13.4 million from our Hotel Dispositions and $3.9 million from the KEYS A and B properties. The decrease in direct expenses was partially offset by an increase in the 2025 period of $1.2 million and $1.9 million from our comparable hotel properties and the Le Méridien Opening, respectively. Direct expenses were 30.3% of total hotel revenue for the 2025 period and 30.6% for the 2024 period.
Indirect expenses and management fees decreased $16.8 million in the 2025 period compared to the 2024 period, comprising a decrease of $15.8 million from our Hotel Dispositions and $6.3 million from the KEYS A and B properties. These decreases in the 2025 period were partially offset by an increase of $2.9 million from our comparable hotel properties and $2.0 million and $417,000 in the 2025 period from the Le Méridien Opening and the Stirling hotel properties, respectively.
Property Taxes, Insurance and Other. Property taxes, insurance and other expense decreased $2.0 million or 5.8%, to $32.3 million in the 2025 period compared to the 2024 period. The decrease in the 2025 period was primarily due to a decrease of $3.3 million from our Hotel Dispositions and $1.0 million from the KEYS A and B properties. The decrease in the 2025 period was partially offset by an increase of $1.6 million from our comparable hotel properties and $768,000 from the Le Méridien Opening.
Depreciation and Amortization. Depreciation and amortization decreased $5.1 million or 6.6%, to $72.6 million in the 2025 period compared to the 2024 period. The decrease in the 2025 period was primarily due to lower depreciation of $3.7 million from our Hotel Dispositions, $1.8 million from our comparable hotels and $1.8 million from the KEYS A and B properties. The decrease in the 2025 period was partially offset by $2.2 million from the Le Méridien Opening.
Impairment Charges.Impairment charges were $1.4 million in the 2025 period. We recorded an impairment charge of $1.4 million at the Residence Inn Evansville as a result of reduced estimated cash flows resulting from the sale of the property in August 2025.
Advisory Services Fee.The advisory services fee decreased $3.1 million, or 11.7%, to $23.6 million in the 2025 period compared to the 2024 period. 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 2025 period, the advisory services fee primarily comprised a base advisory fee of $16.3 million, reimbursable expenses of $6.5 million and fees totaling $574,000 associated with Stirling OP's advisory agreement. In the 2024 period, the advisory services fee comprised a base advisory fee of $15.9 million, equity-based compensation of $1.0 million awarded to the officers and employees of Ashford Inc., reimbursable expenses of $9.1 million and fees totaling $542,000 associated with Stirling OP's advisory agreement.
Corporate, General and Administrative. Corporate, general and administrative expenses decreased $5.6 million, or 36.3%, to $9.8 million in the 2025 period compared to the 2024 period. The decrease was primarily attributable to a decrease in reimbursements of Ashford Securities' operating expenses of $2.7 million and decreases in legal and professional expenses and miscellaneous expenses of $1.8 million and $1.0 million, respectively.
Gain (Loss) on Consolidation of VIE and Disposition of Assets and Hotel Properties. Gain on consolidation of VIE and disposition of assets and hotel properties decreased $55.8 million, from $94.4 million in the 2024 period to $38.6 million in the 2025 period. The gain in the 2025 period was primarily related to the sale of the Boston Courtyard Downtown in January 2025 and the sale of a parcel of land previously owned by our Residence Inn Orlando property in April 2025. The gain in the 2024 period was primarily related to the sale of seven of our hotel properties in the 2024 period.
Gain (Loss) on Derecognition of Assets. Gain on derecognition of assets decreased $125.7 million, from $145.6 million in the 2024 period to $19.9 million in the 2025 period. The gain primarily represents the increase of the contract asset on our consolidated balance sheets. We record a contract asset associated with the accrued interest expense from the default of the KEYS A and KEYS B loans as we expect to be released from this obligation upon final resolution with the lender. The gain in the 2025 period primarily relates to accrued interest on the KEYS A and B properties in receivership and the transfer of the SpringHill Suites BWI Airport to a third-party purchaser in June of 2025. In the 2024 period, the gain primarily related to a gain of $133.9 million from the initial derecognition of assets of the KEYS A and B properties. See note 7 to our consolidated financial statements.
Equity in Earnings (Loss) of Unconsolidated Entities. Equity in loss of unconsolidated entities was $387,000 in the 2025 period and $695,000 in the 2024 period. Equity in loss primarily results from our investment in an entity that owns the Meritage Resort and Spa and the Grand Reserve at the Meritage in Napa, California.
Interest Income. Interest income was $2.5 million and $3.7 million in the 2025 period and the 2024 period, respectively. The decrease in interest income in the 2025 period was primarily attributable to lower excess cash balances in the 2025 period compared to the 2024 period.
Other Income (Expense). In the 2025 period and the 2024 period, we recorded miscellaneous income of $0 and $72,000, respectively.
Interest Expense and Amortization of Discounts and Loan Costs. Interest expense and amortization of discounts and loan costs decreased $4.9 million, or 3.4%, to $137.5 million in the 2025 period compared to the 2024 period. The decrease was primarily due to lower cash interest expense and amortization of loan costs of $13.0 million on the Oaktree loan as a result of the pay-off of the Oaktree loan in February 2025 and a $10.1 million decrease from our Hotel Dispositions. These decreases were partially offset by higher default interest and late charges recorded on mortgage loans in default of $12.9 million, higher interest expense and amortization of discounts and loan costs at our comparable hotels of $2.9 million primarily driven by
refinancing activity and loan modifications, and higher interest expense of $2.4 million from the Le Méridien Opening. The average SOFR rates in the 2025 period and the 2024 period were 4.34% and 5.33%, respectively.
Interest Expense Associated with Hotels in Receivership. Interest expense associated with hotels in receivership decreased $4.1 million, from $24.0 million in the 2024 period to $19.9 million in the 2025 period. The decrease is due to four fewer hotels being under receivership in the 2025 period compared to the 2024 period. On July 2, 2024, the Courtyard Plano Legacy Park and the Residence Inn Plano were foreclosed on at a public auction. Additionally, on November 4, 2024 and June 25, 2025, the receiver appointed for the KEYS Pool A and KEYS Pool B mortgage loans transferred the Courtyard Columbus Tipton Lakes and SpringHill Suites BWI Airport, respectively, to a third-party purchaser. As a result, the contract asset and corresponding indebtedness associated with hotels in receivership and the accrued interest associated with hotels in receivership were reduced for the amounts attributable to each hotel. See note 7 to our consolidated financial statements.
Write-off of Premiums, Loan Costs and Exit Fees. Write-off of premiums, loan costs and exit fees increased to $6.1 million in the 2025 period compared to the 2024 period. In the 2025 period, we incurred fees of approximately $3.3 million related to loan refinances and modifications, $2.2 million related to prepayment penalties and exit fees on loan refinances, wrote-off $378,000 of unamortized loan costs and incurred $193,000 non-reimbursed legal fees relating to the repaying the Oaktree loan. In the 2024 period, we incurred fees of $3.0 million related to loan refinances and modifications, and an $817,000 write-off of unamortized loan cost.
Gain (Loss) on Extinguishment of Debt. Gain (loss) on extinguishment of debt resulted in a loss of $15,000 in the 2025 period and gain of $45,000 in the 2024 period.
Realized and Unrealized Gain (Loss) on Derivatives. Realized and unrealized gain (loss) on derivatives changed by $9.7 million from a $6.1 million gain in the 2024 period to a $3.6 million loss in the 2025 period. In the 2025 period, we recognized $4.4 million of net unrealized losses on our derivatives which were primarily attributable to interest rate caps. These unrealized losses were partially offset by net realized gains on interest rate caps of $795,000.
In the 2024 period, we recognized an unrealized gain of $2.5 million from the revaluation of the embedded debt derivative in the Oaktree Agreement and a realized gain of $16.1 million related to payments from counterparties on interest rate caps. These gains were partially offset by an unrealized loss of $12.5 million associated with interest rate caps.
Income Tax (Expense) Benefit. Income tax expense decreased $3.3 million, from $3.8 million in the 2024 period to $436,000 in the 2025 period. This decrease was primarily due to a decrease in current state taxes in the 2025 period compared to the 2024 period.
(Income) Loss from Consolidated Entities Attributable to Noncontrolling Interests. Our noncontrolling interest partners in consolidated entities were allocated a loss of $3.2 million and $17,000 in the 2025 period and the 2024 period, respectively. At June 30, 2025, noncontrolling interests in consolidated entities represented an ownership interest of 70.7% in 815 Commerce MM and 1.30% in Stirling OP. See note 2 to our consolidated financial statements.
Net (Income) Loss Attributable to Redeemable Noncontrolling Interests in Operating Partnership. Noncontrolling interests in operating partnership were allocated a net loss of $1.1 million in the 2025 period and net income of $1.4 million in the 2024 period. Redeemable noncontrolling interests represented ownership interests of 1.56% and 1.26% in the operating partnership as of June 30, 2025 and 2024, respectively.
LIQUIDITY AND CAPITAL RESOURCES
Liquidity
As of June 30, 2025, the Company held cash and cash equivalents of $101.3 million and restricted cash of $154.6 million (including amounts held for sale), the vast majority of which comprises lender and manager-held reserves. As of June 30, 2025, $21.8 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, 2025, our net debt to gross assets was 71.3%.
The Company's cash and cash equivalents primarily comprised corporate cash invested in short-term U.S. Treasury securities with maturity dates of less than 90 days and corporate cash held at commercial banks in Insured Cash Sweep ("ICS") accounts, which are fully insured by the FDIC. The Company's cash and cash equivalents also includes property-level operating cash deposited with commercial banks that have been designated as a Global Systemically Important Bank ("G-SIB") by the Financial Stability Board ("FSB") and a small amount deposited with other commercial banks.
Based on our current level of operations, our cash flow from operations, capital market activities, asset sales and our existing cash balances should be adequate to meet upcoming anticipated requirements for interest and principal payments on debt (excluding any potential final maturity payments and paydowns for extension tests), working capital and capital expenditures for the next 12 months and dividends required to maintain our status as a REIT for U.S. federal income tax purposes. With respect to upcoming maturities, no assurances can be given that we will be able to refinance our upcoming maturities. Additionally, no assurances can be given that we will obtain additional financings or, if we do, what the amount and terms will be. Our failure to obtain future financing under favorable terms could adversely impact our ability to execute our business strategy or may result in lender foreclosure.
Our cash position from operations is affected primarily by macro industry movements in occupancy and rates as well as our ability to control costs. Further, interest rates can greatly affect the cost of our debt service as well as the value of any financial hedges we may put in place. We monitor industry fundamentals and interest rates very closely. Capital expenditures above our reserves will affect cash flow as well and are impacted by inflation.
Certain of our loan agreements contain cash trap provisions that may be triggered if the performance of our hotels declines below a threshold. When these provisions are triggered, substantially all of the profit generated by our hotels is deposited directly into lockbox accounts and then swept into cash management accounts for the benefit of our various lenders. During a cash trap, certain disbursements from these hotel operating cash receipts would require consent of our lenders. At June 30, 2025, 47 of our hotels were in cash traps and approximately $4.6 million of our restricted cash was subject to these cash traps. Our loans currently in cash traps may remain subject to cash trap provisions for a substantial period of time, which could limit our flexibility and adversely affect our financial condition or our qualification as a REIT.
We have extension options relating to certain property-level loans that will permit us to extend the maturity date of our loans if certain conditions are satisfied at the respective extension dates, including the achievement of debt yield targets required in order to extend such loans. To the extent we decide to extend the maturity date of the debt outstanding under the loans, we may be required to prepay a significant amount of the loans in order to meet the required debt yield targets. There can be no assurances that we will be able to meet the conditions for extensions pursuant to the respective terms of such loans.
If we violate covenants in our debt agreements, we could be required to repay all or a portion of our indebtedness before maturity at a time when we might be unable to arrange financing for such repayment on attractive terms, if at all. The assets of certain of our subsidiaries are pledged under non-recourse indebtedness and are not available to satisfy the debts and other obligations of Ashford Trust or Ashford Trust OP, our operating partnership, and the liabilities of such subsidiaries do not constitute the obligations of Ashford Trust or Ashford Trust OP.
Mortgage and mezzanine loans are nonrecourse to the borrowers, except for customary exceptions or carve-outs that trigger recourse liability to the borrowers in certain limited instances. Recourse obligations typically include only the payment of costs and liabilities suffered by lenders as a result of the occurrence of certain bad acts on the part of the borrower. However, in certain cases, carve-outs could trigger recourse obligations on the part of the borrower with respect to repayment of all or a portion of the outstanding principal amount of the loans. We have entered into customary guaranty agreements pursuant to which we guaranty payment of any recourse liabilities of the borrowers that result from non-recourse carve-outs (which include, but are not limited to, fraud, misrepresentation, willful conduct resulting in waste, misappropriation of rents following an event of default, voluntary bankruptcy filings, unpermitted transfers of collateral and certain environmental liabilities). In the opinion of management, none of these guaranty agreements, either individually or in the aggregate, are likely to have a material adverse effect on our business, results of operations, or financial condition.
We have entered into certain customary guaranty agreements pursuant to which we guarantee payment of any recourse liabilities of our subsidiaries or joint ventures that may result from non-recourse carve-outs, which include, but are not limited to, fraud, misrepresentation, willful misconduct resulting in waste, misappropriation of rents following an event of default, voluntary bankruptcy filings, unpermitted transfers of collateral, delinquency of trade payables and certain environmental liabilities. Certain of these guarantees represent a guaranty of material amounts, and if we are required to make payments under those guarantees, our liquidity could be adversely affected.
We are committed to an investment strategy where we will pursue hotel-related investments as suitable situations arise. Funds for future hotel-related investments are expected to be derived, in whole or in part, from cash on hand, future borrowings under a credit facility or other loans or proceeds from additional issuances of common stock, preferred stock (including net proceeds from the sale of any shares of Series L Preferred Stock or Series M Preferred Stock), or other securities, asset sales, and joint ventures. However, we have no formal commitment or understanding to invest in additional assets, and there can be no assurance that we will successfully make additional investments. We may, when conditions are suitable, consider additional capital-raising opportunities.
Our existing hotel properties are mostly located in developed areas with competing hotel properties. Future occupancy, ADR, and RevPAR of any individual hotel could be materially and adversely affected by an increase in the number or quality of competitive hotel properties, home-sharing companies or apartment operators offering short-term rentals in its market area. Competition could also affect the quality and quantity of future investment opportunities.
Debt Transactions
The Company continues to work with the lender of the KEYS A and KEYS B loan pools on a consensual transfer of ownership of those hotels to the lender. The original lenders previously transferred the loans to a securitization trust. On March 1, 2024, the Company received notice that the hotel properties that secured the KEYS Pool A and KEYS Pool B loans have been transferred to a court-appointed receiver. Below is a summary of the hotel properties that secured the KEYS Pool A and Pool B loans:
KEYS A Loan Pool
Courtyard Columbus Tipton Lakes - Columbus, IN
Courtyard Old Town - Scottsdale, AZ
Residence Inn Hughes Center - Las Vegas, NV
Residence Inn Phoenix Airport - Phoenix, AZ
Residence Inn San Jose Newark - Newark, CA
SpringHill Suites Manhattan Beach - Hawthorne, CA
SpringHill Suites Plymouth Meeting - Plymouth Meeting, PA
KEYS B Loan Pool
Courtyard Basking Ridge - Basking Ridge, NJ
Courtyard Newark Silicon Valley - Newark, CA
Courtyard Oakland Airport - Oakland, CA
Courtyard Plano Legacy Park - Plano, TX
Residence Inn Plano - Plano, TX
SpringHill Suites BWI Airport - Baltimore, MD
TownePlace Suites Manhattan Beach - Hawthorne, CA
We derecognized the hotel properties that secured 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 for the three months ended March 31, 2024. We recorded a contract asset of $378.2 million as of March 31, 2024, which represented the liabilities from which we expect to be released 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. On July 2, 2024, the Courtyard Plano Legacy Park and the Residence Inn Plano were foreclosed on at a public auction. Additionally, on November 4, 2024 and June 25, 2025, the receiver appointed for the KEYS Pool A and KEYS Pool B mortgage loans transferred the Courtyard Columbus Tipton Lakes and SpringHill Suites BWI Airport, respectively, to a third-party purchaser.
For the three and six months ended June 30, 2025, we recognized additional gains of $9.9 million and $19.9 million, respectively, which were included in "gain (loss) on derecognition of assets" in our consolidated statement of operations that increased the contract asset by a corresponding amount. The KEYS Pool A and the 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 are included in "indebtedness associated with hotels in receivership" and "accrued interest associated with hotels in receivership" on our consolidated balance sheets.
On February 12, 2025, the Company closed on a $580 million refinancing secured by 16 hotels. The financing includes the hotels that were previously part of the Company's KEYS Pool C Loan, KEYS Pool D Loan, KEYS Pool E Loan, and the BAML Pool 3 Loan, together with the Westin Princeton. The previous loans had a combined outstanding loan balance of approximately $438.7 million. The new financing is non-recourse, has a two-year term with three one-year extension options, subject to the satisfaction of certain conditions, and bears interest at a floating interest rate of SOFR + 4.37%. The Company used approximately $72 million of the excess proceeds to completely pay off the remaining balance on the Oaktree Credit Agreement, including the $30.0 million exit fee.
On February 24, 2025, the Company amended its mortgage loan secured by the 141-room Hotel Indigo Atlanta Midtown in Atlanta, Georgia. Terms of the amendment included extending the current maturity date to February 2026 and adding one one-year extension option, subject to satisfaction of certain conditions.
On March 6, 2025, the $22.1 million non-recourse mortgage loan secured by the Hilton Scotts Valley reached final maturity and was not repaid, resulting in a default under the terms and conditions of the mortgage loan agreement. The Company is in active discussions with the lender regarding a multi-year extension of the mortgage loan.
On April 14, 2025, the Company successfully extended its Morgan Stanley Pool mortgage loan secured by 17 hotels. The loan had an original final maturity date in November of 2024. The extension provides for an initial maturity in March of 2026 and two one-year extension options, subject to the satisfaction of certain conditions, with a final maturity date in March of 2028. The loan has a current balance of $409.8 million and continues to bear interest at a floating rate of SOFR + 3.39%.
On May 8, 2025, the Company received $35.0 million in return for an equity investment in a hotel property. The holder is entitled to a preferred return of 14.0% per annum. The investment is mandatorily redeemable on May 10, 2029.
On July 30, 2025, the Company extended its Highland mortgage loan secured by 18 hotels with an original maturity date of April 2025. Terms of the amendment included a $10.0 million principal paydown, extending the maturity date to January 9, 2026. The loan is subject to a six-month extension option to July 9, 2026, upon satisfaction of certain conditions, and bears interest at a floating rate of SOFR + 4.13%.
On August 14, 2025, Ashford Trust OP executed the Promissory Note with Ashford LLC allowing Ashford Trust OP to draw up to $20 million in cash through August 15, 2026 to fund Permitted Costs (as defined in the Promissory Note). Funds advanced under the Promissory Note bear interest at an annual rate of 10.0% which may be paid in cash or paid in-kind at Ashford OP's discretion. The maturity date of the Promissory Note is August 15, 2026, at which time all principal drawn upon and outstanding interest are due and payable. As collateral to secure the repayment of any amounts advanced by Ashford LLC under the Promissory Note, the Company pledged to Ashford LLC the Company's equity in Ashford Trust OP subject to Ashford LLC's filing of a financing statement in the appropriate jurisdiction.
Equity Transactions
The board of directors has approved a stock repurchase program (the "Repurchase Program") to acquire shares of the Company's common stock and preferred stock having an aggregate value of up to $200 million. No shares have been repurchased under the Repurchase Program. The ability to make repurchases under the Repurchase Program is subject to the same financial factors that must be taken into account in declaring a dividend as discussed herein under "Distribution Policy."
The Company has a distribution agreement with Virtu (the "Virtu Equity Distribution Agreement") 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 12, 2025, the Company has issued approximately 813,000 shares of common stock for gross proceeds of approximately $10.9 million under the Virtu Equity Distribution Agreement.
On April 29, 2025, the Company filed a shelf registration statement on Form S-3 with the SEC relating to common stock, preferred stock, depositary shares, debt securities, warrants, rights and units that we may sell from time to time in one or more offerings up to a total dollar amount of $500,000,000 on terms to be determined at the time of sale. The registration statement was declared effective on May 8, 2025. As of August 12, 2025, the Company has not issued any securities from this registration statement.
On December 13, 2024, the Company filed an initial registration statement on Form S-11 with the SEC, as amended on January 23, 2025, related to the Company's non-traded Series L Redeemable Preferred Stock and Series M Redeemable Preferred Stock. The registration statement was declared effective by the SEC on February 7, 2025, and contemplates the offering of up to (i) 8.4 million shares of Series L Redeemable Preferred Stock and 3.6 million shares of Series M Redeemable Preferred Stock in a primary offering and (ii) 2.8 million shares of Series L Redeemable Preferred Stock and 1.2 million shares of Series M Redeemable Preferred Stock pursuant to a dividend reinvestment plan. On February 7, 2025, 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 12, 2025, the Company has issued approximately 149,000 shares (exclusive of the dividend reinvestment plan shares) of Series L Preferred Stock and received net proceeds of approximately $3.1 million and approximately 279,000 shares (exclusive of the dividend reinvestment plan shares) of Series M Preferred Stock and received net proceeds of approximately $6.2 million.
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. On March 31, 2025, the Company concluded its offering of its Series J Preferred Stock and Series K Preferred Stock. Ashford Securities, a subsidiary of Ashford Inc., served as the dealer manager for the offering. As of August 12, 2025, the Company has issued approximately 7.7 million shares (exclusive of the dividend reinvestment plan shares) of Series J Preferred Stock and received net proceeds of approximately $172.6 million and approximately 799,000 shares (exclusive of the dividend reinvestment plan shares) of Series K Preferred Stock and received net proceeds of approximately $19.4 million.
Sources and Uses of Cash
Our principal sources of funds to meet our cash requirements include cash on hand, cash flow from operations, capital market activities, property refinancing proceeds and asset sales. Additionally, our principal uses of funds are expected to include possible operating shortfalls, owner-funded capital expenditures, dividends, new investments and debt interest and principal payments. Items that impacted our cash flow and liquidity during the periods indicated are summarized as follows:
Net Cash Flows Provided by (Used in) Operating Activities. Net cash flows used in operating activities were $8.6 million and $38.5 million for the six months ended June 30, 2025 and 2024, respectively. Cash flows used in operations were impacted by changes in hotel operations, our hotel dispositions and derecognized assets, as well as the timing of collecting receivables from hotel guests, paying vendors and settling with derivative counterparties, related parties and hotel managers.
Net Cash Flows Provided by (Used in) Investing Activities. For the six months ended June 30, 2025, net cash flows provided by investing activities were $105.8 million. Cash inflows consisted of $126.4 million of net proceeds from the disposition of assets and hotel properties, which included $119.2 million of net proceeds from the disposition of our Courtyard Boston property and $7.2 million of net proceeds from the disposition of a land parcel previously owned by our Residence Inn Orlando property. Additional cash inflows included $18.8 million of net proceeds from the sale of state tax credits related to the Le Meridien property and $449,000 from property insurance proceeds. Cash inflows were partially offset by cash outflows of $39.8 million for capital improvements made to various hotel properties.
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. Cash inflows were 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.
Net Cash Flows Provided by (Used in) Financing Activities. For the six months ended June 30, 2025, net cash flows used in financing activities were $61.8 million. Cash outflows primarily consisted of $542.3 million for repayments of indebtedness, $42.1 million for payments of loan costs and exit fees, $4.8 million of payments for derivatives and $11.6 million of payments for preferred dividends. Cash outflows were partially offset by cash inflows from $506.7 million of borrowing on indebtedness, $28.1 million of net proceeds from preferred stock offerings, proceeds of $2.4 million from counterparties from in-the-money interest rate caps and $1.9 million of contributions from noncontrolling interests.
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. Cash outflows were partially offset by cash inflows primarily of $28.2 million of borrowing on indebtedness, $42.3 million of net proceeds from preferred stock offerings, $16.4 million from counterparties from in-the-money interest rate caps, $7.8 million of net proceeds from common stock offerings and $3.0 million of contributions from noncontrolling interests.
Dividend Policy. Distributions are authorized by our board of directors and declared by us based upon a variety of factors deemed relevant by our directors. The board of directors will continue to review our distribution policy on at least a quarterly basis. Our ability to pay distributions to our preferred or common stockholders will depend, in part, upon our receipt of distributions from our operating partnership. This, in turn, may depend upon receipt of lease payments with respect to our properties from indirect subsidiaries of our operating partnership, the management of our properties by our hotel managers and general business conditions. Distributions to our stockholders are generally taxable to our stockholders as ordinary income. However, since a portion of our investments are equity ownership interests in hotels, which result in depreciation and non-cash charges against our income, a portion of our distributions may constitute a non-taxable return of capital, to the extent of a stockholder's tax basis in the stock. To the extent that it is consistent with maintaining our REIT status, we may maintain accumulated earnings of Ashford TRS in that entity.
On December 10, 2024, our board of directors reviewed and approved our 2025 dividend policy. We do not anticipate paying any dividends on our outstanding common stock for any quarter during 2025 and expect to pay dividends on our outstanding preferred stock during 2025. Our board of directors will continue to review our dividend policy and make future announcements with respect thereto. We may incur indebtedness to meet distribution requirements imposed on REITs under the Code to the extent that working capital and cash flow from our investments are insufficient to fund required distributions. We may pay dividends in excess of our cash flow.
SEASONALITY
Our properties' operations historically have been seasonal as certain properties maintain higher occupancy rates during the summer months, while certain other properties maintain higher occupancy rates during the winter months. This seasonality pattern can cause fluctuations in our quarterly lease revenue under our percentage leases. Quarterly revenue also may be adversely affected by renovations and repositionings, our managers' effectiveness in generating business and by events beyond our control, such as pandemics, extreme weather conditions, natural disasters, terrorist attacks or alerts, civil unrest, government shutdowns, airline strikes or reduced airline capacity, economic factors and other considerations affecting travel. To the extent that cash flows from operations are insufficient during any quarter to enable us to make quarterly distributions to maintain our REIT status due to temporary or seasonal fluctuations in lease revenue, we expect to utilize cash on hand, borrowings and common stock to fund required distributions. However, we cannot make any assurances that we will make distributions in the future.
CRITICAL ACCOUNTING POLICIES AND ESTIMATES
The preparation of our consolidated financial statements in accordance with accounting principles generally accepted in the United States requires us to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates. Our accounting policies that are critical or most important to understanding our financial condition and results of operations and that require management to make the most difficult judgments are described in our 2024 Form 10-K. There have been no material changes in these critical accounting policies.
NON-GAAP FINANCIAL MEASURES
The following non-GAAP presentations of EBITDA, EBITDAre, Adjusted EBITDAre, FFO and Adjusted FFO are presented to help our investors evaluate our operating performance.
EBITDA is defined as net income (loss) before interest expense and amortization of discounts and loan costs, net, income taxes, depreciation and amortization, as adjusted to reflect only the Company's portion of EBITDA of unconsolidated entities. In addition, we exclude impairment on real estate, gain/loss on consolidation of VIE and disposition of assets and hotel properties, gain/loss on derecognition of assets and gain/loss of unconsolidated entities to calculate EBITDAre, as defined by NAREIT.
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.
We present EBITDA, EBITDAre and Adjusted EBITDAre because we believe they are useful to an investor in evaluating our operating performance because it provides investors with an indication of our ability to incur and service debt, to satisfy general operating expenses, to make capital expenditures and to fund other cash needs or reinvest cash into our business. We also believe it helps investors meaningfully evaluate and compare the results of our operations from period to period by removing the effect of our asset base (primarily depreciation and amortization) from our operating results. Our management team also uses EBITDA as one measure in determining the value of acquisitions and dispositions. EBITDA, EBITDAre and Adjusted EBITDAre as calculated by us may not be comparable to EBITDA, EBITDAre and Adjusted EBITDAre reported by other companies that do not define EBITDA, EBITDAre and Adjusted EBITDAre exactly as we define the terms. EBITDA, EBITDAre and Adjusted EBITDAre do not represent cash generated from operating activities determined in accordance with GAAP, and should not be considered as an alternative to operating income (loss) or net income (loss) determined in accordance with GAAP as an indicator of performance or as an alternative to cash flows from operating activities as determined by GAAP as an indicator of liquidity.
The following table reconciles net income (loss) to EBITDA, EBITDAre and Adjusted EBITDAre (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income (loss) | $ | (32,439) | $ | 50,811 | $ | (54,637) | $ | 123,216 | |||||||||||||||
| Interest expense and amortization of discounts and loan costs | 70,687 | 68,416 | 137,489 | 142,377 | |||||||||||||||||||
|
Interest expense associated with hotels in receivership
|
9,902 | 11,944 | 19,948 | 24,042 | |||||||||||||||||||
| Depreciation and amortization | 35,276 | 37,187 | 72,615 | 77,731 | |||||||||||||||||||
| Income tax expense (benefit) | 119 | 3,455 | 436 | 3,758 | |||||||||||||||||||
| Equity in (earnings) loss of unconsolidated entities | (44) | 162 | 387 | 695 | |||||||||||||||||||
| Company's portion of EBITDA of unconsolidated entities | 406 | 215 | 526 | 49 | |||||||||||||||||||
| EBITDA | 83,907 | 172,190 | 176,764 | 371,868 | |||||||||||||||||||
| Impairment charges on real estate | 1,447 | - | 1,447 | - | |||||||||||||||||||
| Gain (loss) on consolidation of VIE and disposition of assets and hotel properties | (6,684) | (87,441) | (38,552) | (94,397) | |||||||||||||||||||
|
Gain (loss) on derecognition of assets
|
(9,900) | (11,725) | (19,946) | (145,634) | |||||||||||||||||||
| EBITDAre | 68,770 | 73,024 | 119,713 | 131,837 | |||||||||||||||||||
| Amortization of unfavorable contract liabilities | (31) | (30) | (61) | (61) | |||||||||||||||||||
| Transaction and conversion costs | 2,173 | 2,109 | 4,101 | 7,231 | |||||||||||||||||||
| Write-off of premiums, loan costs and exit fees | 1,486 | 3,796 | 6,083 | 3,814 | |||||||||||||||||||
| Realized and unrealized (gain) loss on derivatives | 836 | (1,357) | 3,576 | (6,118) | |||||||||||||||||||
| Stock/unit-based compensation | 222 | 723 | 168 | 1,287 | |||||||||||||||||||
| Legal, advisory and settlement costs | 55 | 273 | 852 | 273 | |||||||||||||||||||
| Other (income) expense, net | - | (36) | - | (71) | |||||||||||||||||||
| Advisory services incentive fee | (66) | - | 27 | - | |||||||||||||||||||
|
Stirling performance participation fee
|
111 | - | 227 | - | |||||||||||||||||||
|
(Gain) loss on extinguishment of debt
|
2 | - | 15 | (45) | |||||||||||||||||||
|
Severance
|
274 | 150 | 796 | 150 | |||||||||||||||||||
| Company's portion of adjustments to EBITDAre of unconsolidated entities | - | 6 | - | 6 | |||||||||||||||||||
| Adjusted EBITDAre | $ | 73,832 | $ | 78,658 | $ | 135,497 | $ | 138,303 | |||||||||||||||
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 and hotel properties, 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 fees, 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 not define the term in accordance with the current NAREIT definition or interpret the NAREIT definition differently than we do. FFO and Adjusted FFO do not represent cash generated from operating activities as determined by GAAP and should not be considered as an alternative to (a) GAAP net income or loss as an indication of our financial performance or (b) GAAP cash flows from operating activities as a measure of our liquidity, nor is it indicative of funds available to satisfy our cash needs, including our ability to make cash distributions. However, to facilitate a clear understanding of our historical operating results, we believe that FFO and Adjusted FFO should be considered along with our net income or loss and cash flows reported in the consolidated financial statements.
The following table reconciles net income (loss) to FFO and Adjusted FFO (in thousands):
| Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||||||||||
| 2025 | 2024 | 2025 | 2024 | ||||||||||||||||||||
| Net income (loss) | $ | (32,439) | $ | 50,811 | $ | (54,637) | $ | 123,216 | |||||||||||||||
| (Income) loss attributable to noncontrolling interest in consolidated entities | 1,412 | 8 | 3,188 | 17 | |||||||||||||||||||
| Net (income) loss attributable to redeemable noncontrolling interests in operating partnership | 631 | (565) | 1,082 | (1,418) | |||||||||||||||||||
| Preferred dividends | (7,017) | (5,468) | (13,746) | (10,479) | |||||||||||||||||||
| Deemed dividends on redeemable preferred stock | (2,530) | (669) | (3,587) | (1,351) | |||||||||||||||||||
| Gain (loss) on extinguishment of preferred stock | - | 211 | - | 1,784 | |||||||||||||||||||
| Net income (loss) attributable to common stockholders | (39,943) | 44,328 | (67,700) | 111,769 | |||||||||||||||||||
| Depreciation and amortization of real estate | 34,486 | 37,187 | 71,036 | 77,731 | |||||||||||||||||||
| Gain (loss) on consolidation of VIE and disposition of assets and hotel properties | (6,684) | (87,441) | (38,552) | (94,397) | |||||||||||||||||||
|
(Gain) loss on derecognition of assets
|
(9,900) | (11,725) | (19,946) | (145,634) | |||||||||||||||||||
|
Net income (loss) attributable to redeemable noncontrolling interests in operating partnership
|
(631) | 565 | (1,082) | 1,418 | |||||||||||||||||||
|
Equity in (earnings) loss of unconsolidated entities
|
(44) | 162 | 387 | 695 | |||||||||||||||||||
|
Impairment charges on real estate
|
1,447 | - | 1,447 | - | |||||||||||||||||||
| Company's portion of FFO of unconsolidated entities | 152 | (47) | (81) | (454) | |||||||||||||||||||
|
FFO available to common stockholders and OP unitholders
|
(21,117) | (16,971) | (54,491) | (48,872) | |||||||||||||||||||
| Deemed dividends on redeemable preferred stock | 2,530 | 669 | 3,587 | 1,351 | |||||||||||||||||||
| (Gain) loss on extinguishment of preferred stock | - | (211) | - | (1,784) | |||||||||||||||||||
| Transaction and conversion costs | 2,173 | 2,109 | 4,101 | 7,231 | |||||||||||||||||||
| Write-off of premiums, loan costs and exit fees | 1,486 | 3,796 | 6,083 | 3,814 | |||||||||||||||||||
| Unrealized (gain) loss on derivatives | 1,309 | 6,002 | 4,741 | 9,955 | |||||||||||||||||||
| Stock/unit-based compensation | 222 | 723 | 168 | 1,287 | |||||||||||||||||||
| Legal, advisory and settlement costs | 55 | 273 | 852 | 273 | |||||||||||||||||||
| Other (income) expense, net | - | (36) | - | (71) | |||||||||||||||||||
| Amortization of term loan exit fee | - | - | - | 844 | |||||||||||||||||||
| Amortization of loan costs | 7,705 | 3,338 | 12,868 | 5,546 | |||||||||||||||||||
| Advisory services incentive fee | (66) | - | 27 | - | |||||||||||||||||||
|
Stirling performance participation fee
|
111 | - | 227 | - | |||||||||||||||||||
| (Gain) loss on extinguishment of debt | 2 | - | 15 | (45) | |||||||||||||||||||
|
Interest expense associated with hotels in receivership
|
9,902 | 11,944 | 19,948 | 18,495 | |||||||||||||||||||
|
Severance
|
274 | 150 | 796 | 150 | |||||||||||||||||||
| Company's portion of adjustments to FFO of unconsolidated entities | 35 | 6 | 75 | 6 | |||||||||||||||||||
|
Adjusted FFO available to common stockholders and OP unitholders
|
$ | 4,621 | $ | 11,792 | $ | (1,003) | $ | (1,820) | |||||||||||||||
HOTEL PORTFOLIO
The following table presents certain information related to our hotel properties as of June 30, 2025:
| Hotel Property | Location | Service Type | Total Rooms | % Owned | Owned Rooms | |||||||||||||||||||||||||||
| Fee Simple Properties | ||||||||||||||||||||||||||||||||
| Embassy Suites | Austin, TX | Full-service | 150 | 100 | 150 | |||||||||||||||||||||||||||
| Embassy Suites | Dallas, TX | Full-service | 150 | 100 | 150 | |||||||||||||||||||||||||||
| Embassy Suites | Herndon, VA | Full-service | 150 | 100 | 150 | |||||||||||||||||||||||||||
| Embassy Suites | Las Vegas, NV | Full-service | 220 | 100 | 220 | |||||||||||||||||||||||||||
| Embassy Suites | Houston, TX | Full-service | 150 | 100 | 150 | |||||||||||||||||||||||||||
| Embassy Suites | West Palm Beach, FL | Full-service | 160 | 100 | 160 | |||||||||||||||||||||||||||
| Embassy Suites | Philadelphia, PA | Full-service | 263 | 100 | 263 | |||||||||||||||||||||||||||
| Embassy Suites | Arlington, VA | Full-service | 269 | 100 | 269 | |||||||||||||||||||||||||||
| Embassy Suites | Portland, OR | Full-service | 276 | 100 | 276 | |||||||||||||||||||||||||||
| Embassy Suites | Santa Clara, CA | Full-service | 258 | 100 | 258 | |||||||||||||||||||||||||||
| Embassy Suites | Orlando, FL | Full-service | 174 | 100 | 174 | |||||||||||||||||||||||||||
| Hilton Garden Inn | Jacksonville, FL | Select-service | 119 | 100 | 119 | |||||||||||||||||||||||||||
| Hilton Garden Inn | Austin, TX | Select-service | 254 | 100 | 254 | |||||||||||||||||||||||||||
| Hilton Garden Inn | Baltimore, MD | Select-service | 158 | 100 | 158 | |||||||||||||||||||||||||||
| Hotel Property | Location | Service Type | Total Rooms | % Owned | Owned Rooms | |||||||||||||||||||||||||||
| Hilton Garden Inn | Virginia Beach, VA | Select-service | 176 | 100 | 176 | |||||||||||||||||||||||||||
| Hilton | Houston, TX | Full-service | 242 | 100 | 242 | |||||||||||||||||||||||||||
| Hilton | St. Petersburg, FL | Full-service | 333 | 100 | 333 | |||||||||||||||||||||||||||
| Hilton | Santa Fe, NM | Full-service | 158 | 100 | 158 | |||||||||||||||||||||||||||
| Hilton | Bloomington, MN | Full-service | 300 | 100 | 300 | |||||||||||||||||||||||||||
| Hilton | Costa Mesa, CA | Full-service | 486 | 100 | 486 | |||||||||||||||||||||||||||
| Hilton | Parsippany, NJ | Full-service | 353 | 100 | 353 | |||||||||||||||||||||||||||
| Hilton | Tampa, FL | Full-service | 238 | 100 | 238 | |||||||||||||||||||||||||||
| Hilton | Alexandria, VA | Full-service | 252 | 100 | 252 | |||||||||||||||||||||||||||
| Hilton | Santa Cruz, CA | Full-service | 178 | 100 | 178 | |||||||||||||||||||||||||||
| Hilton | Ft. Worth, TX | Full-service | 294 | 100 | 294 | |||||||||||||||||||||||||||
|
Hampton Inn (7)
|
Buford, GA | Select-service | 92 | 100 | 92 | |||||||||||||||||||||||||||
| Hampton Inn | Evansville, IN | Select-service | 140 | 100 | 140 | |||||||||||||||||||||||||||
| Hampton Inn | Parsippany, NJ | Select-service | 152 | 100 | 152 | |||||||||||||||||||||||||||
| Marriott | Beverly Hills, CA | Full-service | 260 | 100 | 260 | |||||||||||||||||||||||||||
| Marriott | Arlington, VA | Full-service | 703 | 100 | 703 | |||||||||||||||||||||||||||
| Marriott | Dallas, TX | Full-service | 265 | 100 | 265 | |||||||||||||||||||||||||||
| Marriott | Fremont, CA | Full-service | 357 | 100 | 357 | |||||||||||||||||||||||||||
| Marriott | Memphis, TN | Full-service | 232 | 100 | 232 | |||||||||||||||||||||||||||
| Marriott | Irving, TX | Full-service | 499 | 100 | 499 | |||||||||||||||||||||||||||
| Marriott | Omaha, NE | Full-service | 300 | 100 | 300 | |||||||||||||||||||||||||||
| Marriott | Sugarland, TX | Full-service | 303 | 100 | 303 | |||||||||||||||||||||||||||
|
SpringHill Suites by Marriott (7)
|
Buford, GA | Select-service | 97 | 100 | 97 | |||||||||||||||||||||||||||
| Courtyard by Marriott | Bloomington, IN | Select-service | 117 | 100 | 117 | |||||||||||||||||||||||||||
| Courtyard by Marriott | Denver, CO | Select-service | 202 | 100 | 202 | |||||||||||||||||||||||||||
| Courtyard by Marriott | Gaithersburg, MD | Select-service | 210 | 100 | 210 | |||||||||||||||||||||||||||
| Courtyard by Marriott | Crystal City, VA | Select-service | 272 | 100 | 272 | |||||||||||||||||||||||||||
| Courtyard by Marriott | Overland Park, KS | Select-service | 168 | 100 | 168 | |||||||||||||||||||||||||||
| Courtyard by Marriott | Foothill Ranch, CA | Select-service | 156 | 100 | 156 | |||||||||||||||||||||||||||
| Courtyard by Marriott | Alpharetta, GA | Select-service | 154 | 100 | 154 | |||||||||||||||||||||||||||
| Marriott Residence Inn | Evansville, IN | Select-service | 78 | 100 | 78 | |||||||||||||||||||||||||||
| Marriott Residence Inn | Orlando, FL | Select-service | 350 | 100 | 350 | |||||||||||||||||||||||||||
| Marriott Residence Inn | Falls Church, VA | Select-service | 159 | 100 | 159 | |||||||||||||||||||||||||||
| Marriott Residence Inn | San Diego, CA | Select-service | 150 | 100 | 150 | |||||||||||||||||||||||||||
|
Marriott Residence Inn (7)
|
Jacksonville, FL | Select-service | 120 | 100 | 120 | |||||||||||||||||||||||||||
|
Marriott Residence Inn (7)
|
Manchester, CT | Select-service | 96 | 100 | 96 | |||||||||||||||||||||||||||
| Sheraton Hotel | Minneapolis, MN | Full-service | 220 | 100 | 220 | |||||||||||||||||||||||||||
| Sheraton Hotel | Indianapolis, IN | Full-service | 378 | 100 | 378 | |||||||||||||||||||||||||||
| Sheraton Hotel | Anchorage, AK | Full-service | 370 | 100 | 370 | |||||||||||||||||||||||||||
| Sheraton Hotel | San Diego, CA | Full-service | 260 | 100 | 260 | |||||||||||||||||||||||||||
| Hyatt Regency | Coral Gables, FL | Full-service | 254 | 100 | 254 | |||||||||||||||||||||||||||
| Hyatt Regency | Hauppauge, NY |
Full-service
|
358 | 100 | 358 | |||||||||||||||||||||||||||
| Hyatt Regency | Savannah, GA | Full-service | 351 | 100 | 351 | |||||||||||||||||||||||||||
| Renaissance | Nashville, TN | Full-service | 674 | 100 | 674 | |||||||||||||||||||||||||||
| Annapolis Historic Inn | Annapolis, MD | Full-service | 124 | 100 | 124 | |||||||||||||||||||||||||||
| Lakeway Resort & Spa | Austin, TX | Full-service | 168 | 100 | 168 | |||||||||||||||||||||||||||
| Silversmith | Chicago, IL | Full-service | 144 | 100 | 144 | |||||||||||||||||||||||||||
| The Churchill |
Washington, DC
|
Full-service | 173 | 100 | 173 | |||||||||||||||||||||||||||
| The Melrose |
Washington, DC
|
Full-service | 240 | 100 | 240 | |||||||||||||||||||||||||||
|
Le Pavillon (1)
|
New Orleans, LA | Full-service | 226 | 100 | 226 | |||||||||||||||||||||||||||
| Westin | Princeton, NJ | Full-service | 296 | 100 | 296 | |||||||||||||||||||||||||||
| Hotel Indigo | Atlanta, GA | Full-service | 141 | 100 | 141 | |||||||||||||||||||||||||||
| Ritz-Carlton | Atlanta, GA | Full-service | 444 | 100 | 444 | |||||||||||||||||||||||||||
| La Posada de Santa Fe | Santa Fe, NM | Full-service | 157 | 100 | 157 | |||||||||||||||||||||||||||
| Leasehold Properties | ||||||||||||||||||||||||||||||||
|
Autograph La Concha (2) (3)
|
Key West, FL | Full-service | 160 | 100 | 160 | |||||||||||||||||||||||||||
| Hotel Property | Location | Service Type | Total Rooms | % Owned | Owned Rooms | |||||||||||||||||||||||||||
|
Renaissance (4)
|
Palm Springs, CA | Full-service | 410 | 100 | 410 | |||||||||||||||||||||||||||
|
Hilton (5)
|
Marietta, GA | Full-service | 200 | 100 | 200 | |||||||||||||||||||||||||||
|
Le Méridien (6)
|
Fort Worth, TX | Full-service | 188 | 29 | 55 | |||||||||||||||||||||||||||
| Total | 17,329 | 17,196 | ||||||||||||||||||||||||||||||
________
(1)The Company entered into a new franchise agreement with Marriott to convert the Le Pavillon in New Orleans, Louisiana to a Tribute Portfolio property. The conversion was completed in November 2024.
(2)The ground lease expires in 2084.
(3) The Company entered into a franchise agreement with Marriott to convert the La Concha Key West Hotel in Key West, Florida to an Autograph Collection property. The conversion was completed in December 2024.
(4) The ground lease expires in 2059.
(5) The lease expires in 2054 and includes the lease of the land, hotel and conference center (including the building, improvements, furniture, fixtures and equipment).
(6)The lease expires in 2120 and includes the lease of the land and building.
(7)Hotel property owned by Stirling OP, but consolidated by the Company.
Ashford Hospitality Trust Inc. published this content on August 14, 2025, and is solely responsible for the information contained herein. Distributed via SEC EDGAR on August 14, 2025 at 20:43 UTC. If you believe the information included in the content is inaccurate or outdated and requires editing or removal, please contact us at [email protected]