Ashford Inc. Announces New Enhanced Return Funding Program Agreement With Ashford Hospitality Trust
Ashford Inc. Announces New Enhanced Return Funding Program Agreement With Ashford Hospitality Trust Estimated Year One Cash-on-Cash Returns of Approximately 50%(1) |
[26-June-2018] |
DALLAS, June 26, 2018 /PRNewswire/ -- Program Highlights:
Ashford Inc. (NYSE American: AINC) ("Ashford" or the "Company") today announced that it has entered into an agreement with Ashford Hospitality Trust, Inc. (NYSE: AHT) ("Ashford Trust") for the new Enhanced Return Funding Program ("ERFP" or the "Program"). Under the Program, Ashford has agreed to provide $50 million to Ashford Trust in connection with the acquisition by Ashford Trust of additional hotels. Ashford will provide 10% of the price of each hotel acquired by Ashford Trust, helping Ashford Trust grow its assets by as much as $500 million. The Company will target funding the Program with approximately 50% cash on hand and 50% debt. The Program will replace Ashford's legacy Key Money concept and has the ability to be upsized based upon mutual agreement. The Program is expected to generate attractive returns on invested capital for Ashford via incremental base advisory fees, potential incentive fees, fees for various products and services offered, and tax savings, with year one cash-on-cash returns estimated at 50%(1) and five year internal rates of return estimated at over 35%(2). Ashford estimates that the ERFP investment made in connection with the Hilton Alexandria Old Town will add an estimated $0.70 to its Adjusted Net Income per Share in year one(3). The Program has potential to improve the five year internal rate of return for each new hotel acquisition at Ashford Trust by up to 700 to 1,200 basis points(4) as well as increase assets under management for Ashford. Subject to the terms of the ERFP agreement, Ashford has agreed to provide approximately $11.1 million to Ashford Trust in connection with its purchase of the Hilton Old Town Alexandria for $111 million. The Company believes the Program should improve Ashford Trust's estimated leveraged internal rate of return on the acquisition from 18.2% to 29.5%, a 62% increase in returns with over 1,100 basis points in absolute improvement(5). The Company anticipates funding the Program with existing cash on its balance sheet, its existing credit facility and with ongoing cash flow. The Company currently has approximately $38 million of cash and cash equivalents on hand and its credit facility has $35 million of available capacity with upsize potential to $75 million using its accordion feature. "We are extremely pleased with the opportunity to utilize our Enhanced Return Funding Program to partner with Ashford Trust on its acquisition of the Hilton Old Town Alexandria. This revolutionary program is one of the newest strategic initiatives at Ashford that should help create value for our shareholders and the shareholders of Ashford Trust alike," said Monty J. Bennett, Ashford's Chairman and Chief Executive Officer. Additional details of the Enhanced Return Funding Program will be provided in a Company 8-K filing and in a Company presentation that will be posted on its website, including related amendments to the Company's advisory agreement with Ashford Trust. The Program, including the ERFP funding in connection with the Hilton Alexandria Old Town acquisition, is subject to the closing of the Company's pending project management transaction. The Company will conduct a conference call on Wednesday, June 27, 2018, at 10:00 a.m. ET to discuss the Program in further detail. The number to call for this interactive teleconference is (201) 493-6779. A replay of the conference call will be available through July 4, 2018 by dialing (412) 317-6671 and entering the confirmation number, 13681050. The live audio broadcast of this call will also be available online at the Company's website, www.ashfordinc.com, by clicking the Investors tab, or by visiting http://public.viavid.com/index.php?id=130219. The Company encourages analysts and investors to listen to the call or webcast and review the presentation slides discussing the Program. Ashford provides global asset management, investment management, and related services to the real estate and hospitality sectors. Ashford Trust is a real estate investment trust (REIT) focused on investing opportunistically in the hospitality industry in upper upscale, full-service hotels. Follow Chairman and CEO Monty Bennett on Twitter at www.twitter.com/MBennettAshford or @MBennettAshford. Ashford has created an Ashford App for the hospitality REIT investor community. The Ashford App is available for free download at Apple's App Store and the Google Play Store by searching "Ashford." Footnotes: Certain statements and assumptions in this press release contain or are based upon "forward-looking" information and are being made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements are subject to risks and uncertainties. When we use the words "will," "may," "anticipate," "estimate," "should," "could," "expect," "believe," "intend," "potential," or similar expressions, we intend to identify forward-looking statements. Such statements are subject to numerous assumptions and uncertainties, many of which are outside Ashford's control. These forward-looking statements are subject to known and unknown risks and uncertainties, which could cause actual results to differ materially from those anticipated, including, without limitation: general volatility of the capital markets and the market price of our common stock; changes in our business or investment strategy; availability, terms and deployment of capital; availability of qualified personnel; changes in our industry and the market in which we operate, interest rates or the general economy; and the degree and nature of our competition. The forward-looking statements included in this press release are only made as of the date of this press release. Investors should not place undue reliance on these forward-looking statements. We are not obligated to publicly update or revise any forward-looking statements, whether as a result of new information, future events or circumstances, changes in expectations or otherwise. View original content:http://www.prnewswire.com/news-releases/ashford-inc-announces-new-enhanced-return-funding-program-agreement-with-ashford-hospitality-trust-300672699.html SOURCE Ashford Inc. | ||
Company Codes: AMEX:AINC, NYSE:AHT |
© 2018 PR Newswire. All Rights Reserved.
#content-news .main-news{color:#737373;font-size:14px;line-height:inherit;text-align:inherit}