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AHT > SEC Filings for AHT > Form 8-K on 19-Jun-2013All Recent SEC Filings

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Form 8-K for ASHFORD HOSPITALITY TRUST INC


19-Jun-2013

Regulation FD Disclosure, Other Events, Financial Statements and Ex


Item 7.01. Regulation FD Disclosure.

Public Offering of Common Stock

On June 19, 2013, Ashford Hospitality Trust, Inc. (the "Company") announced that it commenced a public offering of 11,000,000 shares of its common stock (the "Offering"). In connection with the Offering, the Company intends to grant the underwriters a 30-day option to purchase up to an additional 1,650,000 shares of its common stock.

The press release announcing the commencement of the Offering is attached hereto as Exhibit 99.1 and is incorporated herein by reference.



Item 8.01. Other Events.

Unless otherwise indicated, the information contained in this report is as of March 31, 2013 and assumes the completion of all transactions described in this report.

Spin-Off of Certain Hotels

The board of directors of the Company has determined that a spin-off of certain of its hotels is in the Company's best interests. To accomplish this spin-off, the Company expects to distribute all of the then outstanding shares of Ashford Hospitality Prime, Inc. ("Ashford Prime"), a Maryland corporation that is currently an indirect wholly-owned subsidiary of the Company, by way of a taxable pro rata special distribution to its stockholders. The Company expects that Ashford Prime will elect to be taxed as, and will operate in a manner that will allow it to qualify as, a real estate investment trust ("REIT") for federal income tax purposes. In addition, Ashford Prime will file an application to list its shares of common stock for trading on the New York Stock Exchange.

The Company anticipates that, upon completion of the spin-off, Ashford Hospitality Limited Partnership, the Company's operating partnership ("Ashford Trust OP") will own 20% of the outstanding common units of Ashford Hospitality Prime Limited Partnership, Ashford Prime's operating partnership ("Ashford Prime OP"). Ashford Prime will be externally advised by the Company's to-be-formed subsidiary, Ashford Hospitality Advisors LLC.

Ashford Prime's investment strategy will be to invest primarily in full-service and select-service hotels in the luxury, upper-upscale and upscale segments, which are anticipated to generate revenue per available room ("RevPAR") of at least twice the then current U.S. average RevPAR for all hotels as determined by Smith Travel Research ($130 for the year ended December 31, 2012). Ashford Prime's hotels will be located predominantly in domestic and international gateway markets. The Company will continue to focus on all segments of the hospitality industry with RevPAR criteria outside of Ashford Prime's initial investment focus.

In connection with effecting the spin-off, the Company will contribute to Ashford Prime its direct and indirect interests in a portfolio of eight hotel properties, including the working capital associated with such properties, plus additional working capital, including substantially all of the net proceeds of the Offering.

In exchange for the hotel properties and cash contributed to Ashford Prime, the Company will receive common units of Ashford Prime OP and shares of common stock of Ashford Prime. The Ashford Prime OP common units will be distributed to the limited partners of Ashford Trust OP, including the Company and certain of its officers and directors; and the shares of Ashford Prime common stock will be distributed pro rata to the Company's common stockholders in the spin-off. As a result of these transactions, the Company will own 20% of Ashford Prime OP. The remaining 80% of Ashford Prime OP's outstanding common units will be owned by Ashford Prime and other limited partners, including certain officers and directors of Ashford Prime and certain officers and directors of the Company, in the same relative proportions that the Company and such other limited partners own common units in Ashford Trust OP prior to the spin-off.

Upon completion of the spin-off, the entities owning the hotels will continue to be primarily liable for property-level mortgage debt which had an outstanding principal balance on March 31, 2013 of approximately $627.7 million (including the indebtedness secured by the two hotels currently owned through the Company's consolidated joint ventures).


The following tables set forth information for the eight hotel properties that will be contributed to Ashford Prime in connection with spin-off (dollars in thousands, except ADR and RevPAR):

                                                                                                                                              Year Ended December 31, 2012
                                                                                                                                                                        RevPAR                            Capital
                                                                                                Total        %                                                        Penetration         Hotel         Invested per
Hotel Property                                                                 Location         Rooms      Owned      Occupancy(1)       ADR(2)       RevPAR(3)        Index(4)         EBITDA(5)         Room (6)
Hilton La Jolla Torrey Pines(7)                                            La Jolla, CA            394        75%               76%     $ 166.41     $    126.19             103.2     $     8,898     $         32.9
The Capital Hilton                                                         Washington, D.C.        544        75%               82%       213.93          176.09             107.2          15,285               64.2
Marriott Plano Legacy Town Center                                          Plano, TX               404       100%               66%       162.59          107.91             128.6           8,392               16.4
Seattle Marriott Waterfront                                                Seattle, WA             358       100%               78%       200.34          155.64             110.0          10,521               14.1
Courtyard San Francisco Downtown                                           San Francisco, CA       405       100%               85%       206.95          176.66             103.6          10,135                7.8
Courtyard Seattle Downtown                                                 Seattle, WA             250       100%               72%       148.58          107.02             108.9           4,860               13.9
Courtyard Philadelphia Downtown                                            Philadelphia, PA        498       100%               78%       161.20          125.56             113.0           9,805                8.7
Renaissance Tampa International Plaza(8)                                   Tampa, FL               293       100%               78%       154.68          120.57             127.6           5,144                6.9

Total / Weighted Average(9)                                                                      3,146                          77%     $ 181.13     $    140.20             110.6     $    73,040     $         23.0

                                                                                                                                           Three Months Ended March 31, 2013
                                                                                                                                                                        RevPAR
                                                                                                                                                                      Penetration         Hotel
Hotel Property                                                                 Location                               Occupancy(1)       ADR(2)       RevPAR(3)        Index(4)        EBITDA (5)
Hilton La Jolla Torrey Pines(7)                                            La Jolla, CA                                         66%     $ 174.80     $    114.70              97.0     $     1,716
The Capital Hilton                                                         Washington, D.C.                                     77%       235.67          180.29             109.2           3,710
Marriott Plano Legacy Town Center                                          Plano, TX                                            69%       170.72          118.01             123.7           2,481
Seattle Marriott Waterfront                                                Seattle, WA                                          70%       169.30          118.24             108.0           1,645
Courtyard San Francisco Downtown                                           San Francisco, CA                                    84%       201.78          169.85             105.0           2,278
Courtyard Seattle Downtown                                                 Seattle, WA                                          66%       124.05           81.37             115.2             800
Courtyard Philadelphia Downtown                                            Philadelphia, PA                                     71%       152.60          108.81             119.4           1,931
Renaissance Tampa International Plaza(8)                                   Tampa, FL                                            83%       177.03          147.70             116.3           1,986

Total / Weighted Average(9)                                                                                                     73%     $ 181.60     $    133.27             110.6     $    16,547

(1) "Occupancy" means the total number of hotel rooms sold in a given period divided by the total number of rooms available.

(2) "ADR" means average daily rate, which is calculated by dividing total hotel room revenues by total number of rooms sold in a given period.

(3) RevPAR is calculated by multiplying ADR by the average daily occupancy.

(4) "RevPAR penetration index" measures a hotel's RevPAR in relation to the average RevPAR of that hotel's competitive set. The RevPAR penetration index for a particular hotel is calculated as the quotient of (1) the subject hotel's RevPAR divided by (2) the average RevPAR of the hotels in the subject hotel's competitive set, including the subject hotel, multiplied by
100. RevPAR data, other than the RevPAR of the eight hotel properties to be contributed by Ashford Trust OP to Ashford Prime OP in connection with the spin-off, used in calculating any RevPAR penetration index in this report was provided by Smith Travel Research.

(5) See Exhibit 99.2 for a reconciliation of Hotel EBITDA (as defined in Exhibit 99.2) by property. The Company owns the Hilton La Jolla Torrey Pines and The Capital Hilton in a joint venture. The Hotel EBITDA represents the total amount for each hotel, not the Company's pro rata amount based on the Company's ownership percentage.

(6) Consists of all capital expenditures by the Company since January 1, 2008 and represents the total investment for each hotel, not the Company's pro rata investment based on the Company's ownership percentage. In aggregate, the Company has invested capital of $72.5 million in these hotels during that period.

(7) Subject to a ground lease that expires in 2043.

(8) Subject to a ground lease that expires in 2080.

(9) RevPAR penetration represents a weighted average based on the sum of the product of RevPAR for the competitive set of each hotel and the total room count for the respective hotel for all eight hotels. All other values on this line are calculated on a portfolio basis for all eight hotels.


In connection with the spin-off, the Company also will enter into option agreements to sell the following hotels to Ashford Prime (dollars in thousands, except ADR and RevPAR):

                                                                                                 Year Ended December 31, 2012
                                                                                                                         RevPAR
                                                    Total        %                                                     Penetration         Hotel
Hotel Property                        Location      Rooms      Owned        Occupancy         ADR         RevPAR          Index          EBITDA(1)
Pier House Resort                   Key West, FL       142        100 %           82.8 %    $ 332.71     $ 275.50              97.2     $     5,896
Crystal Gateway Marriott            Arlington, VA      697        100 %           75.1 %      182.39       136.97             112.5          15,972

                                                                                              Three Months Ended March 31, 2013
                                                                                                                         RevPAR
                                                                                                                       Penetration         Hotel
Hotel Property                        Location                              Occupancy         ADR         RevPAR          Index          EBITDA(1)
Pier House Resort                   Key West, FL                                  85.1 %    $ 432.71     $ 368.04              97.3     $     2,584
Crystal Gateway Marriott            Arlington, VA                                 71.6 %      178.32       127.69             111.7           3,622

(1) See Exhibit 99.2 for a reconciliation of Hotel EBITDA by property.

Pursuant to the Pier House Resort option agreement, Ashford Prime will have an 18-month option to acquire the Pier House Resort, and the purchase price initially will be $90.6 million (which is the price that the Company paid when it acquired the property in May 2013 and the out of pocket costs incurred by the Company in connection with the acquisition), plus the cost of any owner funded capital improvements made by the Company prior to acquisition of the hotel by Ashford Prime. The purchase price will increase by 1% six months following the spin-off and will increase an additional 1% 12 months following the spin-off. The Crystal Gateway option agreement will provide Ashford Prime with an option . . .



Item 9.01. Financial Statements and Exhibits.

(a) and (b) Financial Statements

Ashford Hospitality Prime, Inc. and Subsidiaries                               F-1
Unaudited Pro Forma Condensed Combined Consolidated Balance Sheet              F-2
Unaudited Pro Forma Condensed Combined Consolidated Statement of
Operations for the Year Ended December 31, 2012                                F-3
Unaudited Pro Forma Condensed Combined Consolidated Statement of
Operations for the Three Months Ended March 31, 2013                           F-4
Notes to Unaudited Pro Forma Condensed Combined Consolidated Financial
Statements                                                                     F-5

Ashford Hospitality Prime, Inc. and Subsidiaries
Report of Independent Registered Public Accounting Firm                        F-8
Consolidated Balance Sheet                                                     F-9
Notes to Consolidated Balance Sheet                                           F-10

--------------------------------------------------------------------------------
     The Ashford Hospitality Prime Hotels
     Audited Combined Consolidated Financial Statements
     Report of Independent Registered Public Accounting Firm             F-12
     Combined Consolidated Balance Sheets                                F-13
     Combined Consolidated Statements of Operations                      F-14
     Combined Consolidated Statements of Comprehensive Income (Loss)     F-15
     Combined Consolidated Statements of Equity                          F-16
     Combined Consolidated Statements of Cash Flows                      F-17
     Notes to Combined Consolidated Financial Statements                 F-18
     Unaudited Interim Combined Consolidated Financial Statements
     Combined Consolidated Balance Sheets                                F-34
     Combined Consolidated Statements of Operations                      F-35
     Combined Consolidated Statements of Comprehensive Loss              F-36
     Combined Consolidated Statement of Equity                           F-37
     Combined Consolidated Statements of Cash Flows                      F-38
     Notes to Combined Consolidated Financial Statements                 F-39
     Schedule III - Real Estate and Accumulated Depreciation             F-49

     Pier House Joint Venture
     Audited Financial Statements
     Independent Auditors' Report                                        F-51
     Balance Sheets                                                      F-52
     Statements of Operations and Comprehensive Income                   F-53
     Statements of Venturers' Equity                                     F-54
     Statements of Cash Flows                                            F-55
     Notes to Financial Statements                                       F-56
     Unaudited Interim Condensed Financial Statements
     Condensed Balance Sheets                                            F-61
     Condensed Statements of Operations and Comprehensive Income         F-62
     Condensed Statements of Venturers' Equity                           F-63
     Condensed Statements of Cash Flows                                  F-64
     Notes to Condensed Financial Statements                             F-65

     Ashford Crystal Gateway
     Audited Combined Financial Statements
     Report of Independent Registered Public Accounting Firm             F-68
     Combined Balance Sheets                                             F-69
     Combined Statements of Operations and Comprehensive Income          F-70
     Combined Statements of Equity                                       F-71
     Combined Statements of Cash Flows                                   F-72
     Notes to Combined Financial Statements                              F-73
     Unaudited Interim Combined Financial Statements
     Combined Balance Sheets                                             F-82
     Combined Statements of Operations and Comprehensive Loss            F-83
     Combined Statement of Equity                                        F-84
     Combined Statements of Cash Flows                                   F-85
     Notes to Combined Financial Statements                              F-86



(d) Exhibits

Exhibit No.       Description

23.1              Consent of Deloitte & Touche LLP

23.2              Consent of Ernst & Young LLP

99.1              Press Release, issued by Ashford Hospitality Trust, Inc. on June
                  19, 2013

99.2              Non-GAAP Financial Measures

Forward-Looking Statements

This report contains forward-looking statements within the meaning of the federal securities laws. The Company 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 report, words such as "anticipate," "believe," "expect," "intend," "may," "might," "plan," "estimate," "project," "should," "will," "result," and other similar expressions, which do not relate solely to historical matters, are intended to identify forward-looking statements. Such statements are subject to risks, uncertainties, and assumptions and are not guarantees of future performance, which may be affected by known and unknown risks, trends, uncertainties, and factors beyond the Company's control. Should one or more of these risks or uncertainties materialize, or should underlying assumptions prove incorrect, actual results may vary materially from those anticipated, estimated, or projected. The Company cautions investors that while forward-looking statements reflect the Company's good-faith beliefs at the time such statements are made, said statements are not guarantees of future performance and are affected by actual events that occur after such statements are made. The Company expressly disclaims any responsibility to update forward-looking statements, whether as a result of new information, future events, or otherwise. Accordingly, investors should use caution in relying on past forward-looking statements, which were based on results and trends at the time those statements were made, to anticipate future results or trends.

Some risks and uncertainties that may cause the Company's actual results, performance, or achievements to differ materially from those expressed or implied by forward-looking statements include, among others, the Company's ability to complete the spin-off of certain hotel properties on the terms described above or at all, the Company's ability to complete the Offering, and those discussed in the Company's Form 10- K for the year ended December 31, 2012, as filed with the Securities and Exchange Commission on March 1, 2013. These risks and uncertainties continue to be relevant to the Company's performance and financial condition. Moreover, the Company operates in a very competitive and rapidly changing environment where new risk factors emerge from time to time. It is not possible for management to predict all such risk factors, nor can management assess the impact of all such risk factors on the Company's business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Given these risks and uncertainties, investors should not place undue reliance on forward-looking statements as indicators of actual results.


ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

UNAUDITED PRO FORMA COMBINED CONSOLIDATED FINANCIAL STATEMENTS

The unaudited pro forma combined consolidated financial statements as of March 31, 2013 and for the three months then ended and for the year ended December 31, 2012 have been derived from the historical (i) consolidated financial statements of Ashford Hospitality Prime, Inc. and subsidiaries ("Ashford Prime"), (ii) combined consolidated financial statements of The Ashford Hospitality Prime Hotels (the "Hotel Group"), (iii) financial statements of the Pier House Joint Venture, and (iv) combined financial statements of the Ashford Crystal Gateway hotel.

The pro forma adjustments give effect to the following separate transactions:

the historical financial results of the Hotel Group;

the contribution of capital for common units of limited partnership interests ("common units") in Ashford Hospitality Prime Limited Partnership (the "Ashford Prime OP");

the incremental general and administrative expenses expected to be incurred to operate as a public company; and

the completion of the separation and distribution, including the distribution of Ashford Prime's common stock to stockholders of Ashford Hospitality Trust, Inc. ("Ashford Trust") and the related transfer to Ashford Prime from Ashford Trust of Ashford Trust's taxable REIT subsidiaries, that lease Ashford Prime's hotels.

The unaudited pro forma combined consolidated balance sheet as of March 31, 2013 is presented to reflect adjustments to Ashford Hospitality Prime, Inc. and subsidiaries' consolidated balance sheet as if the offering in connection with the separation and distribution and the related transactions were completed on March 31, 2013. The unaudited pro forma combined consolidated statements of operations for the three months ended March 31, 2013 and the year ended December 31, 2012 are presented as if the offering, the separation and distribution and the related transactions were completed on January 1, 2012.

The following unaudited pro forma financial statements should be read in conjunction with (i) Ashford Hospitality Prime, Inc. and subsidiaries' consolidated balance sheet as of April 8, 2013 and the notes thereto, (ii) the Hotel Group's historical combined consolidated financial statements as of March 31, 2013 and December 31, 2012 and 2011, and for the three months ended March 31, 2013 and 2012 and the three years ended December 31, 2012, 2011 and 2010, and the notes thereto appearing elsewhere in this report, (iii) the Pier House Joint Venture's historical financial statements as of March 31, 2013 and December 31, 2012 and 2011, and for the three months ended March 31, 2013 and 2012 and the years ended December 31, 2012 and 2011, and the notes thereto appearing elsewhere in this report and (iv) the Ashford Crystal Gateway's historical combined financial statements as of March 31, 2013 and December 31, 2012 and 2011, and for the three months ended March 31, 2013 and 2012 and the three years ended December 31, 2012, 2011 and 2010, and the notes thereto appearing elsewhere in this report. We have based the unaudited pro forma adjustments on available information and assumptions that we believe are reasonable. The following unaudited pro forma combined consolidated financial statements are presented for informational purposes only and are not necessarily indicative of what our actual financial position would have been as of March 31, 2013 assuming the separation and distribution and the related transactions had been completed on December 31, 2012 or what actual results of operations would have been for the three months ended March 31, 2013 and the year ended December 31, 2012 assuming the separation and distribution and the related transactions had been completed on January 1, 2012, nor are they indicative of future results of operations or financial condition and should not be viewed as indicative of future results of operations or financial condition.

F-1


                ASHFORD HOSPITALITY PRIME, INC. AND SUBSIDIARIES

       UNAUDITED PRO FORMA CONDENSED COMBINED CONSOLIDATED BALANCE SHEET

                                 March 31, 2013

                                 (in thousands)



                                          Ashford
                                        Hospitality
                                        Prime, Inc.             Hotel Group
                                        Historical               Combined                 Separation                                Pier  House            Crystal  Gateway            Pro
                                     Consolidated (A)        Consolidated (B)             Adjustments            Sub-total           Resort(C)                Marriott(D)             Forma
Assets
Investment in hotel properties,
net                                  $              -        $         770,158           $          -            $  770,158        $      90,000           $         232,500       $ 1,092,658

Cash and cash equivalents                            1                  13,706                          (E)                              (90,618 )                        -
                                                                                                (3,000 )(F)
                                                                                               (11,750 )(G)
                                                                                                    (1 )(H)
Restricted cash                                     -                    6,421                      -                 6,421                   -                           -              6,421
. . .
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