DALLAS - Ashford Hospitality Trust, Inc. (NYSE: NYSE:AHT), a real estate investment trust, has announced a 1-for-10 reverse stock split approved by its Board of Directors. The reverse split will be effective at the close of business on October 25, 2024, with shares expected to begin trading on a split-adjusted basis on the New York Stock Exchange on October 28, 2024.
The action aims to elevate the per-share trading price of Ashford (NYSE:AINC) Trust's common stock to ensure compliance with the NYSE's minimum continued listing requirement of $1.00 per share. The reverse stock split will reduce the number of outstanding common stock from approximately 54.6 million shares to 5.5 million shares. No fractional shares will be issued; instead, they will be sold in the open market, and the cash proceeds will be distributed to the affected stockholders.
Additionally, the company's operating partnership, Ashford Hospitality Limited Partnership (Ashford Trust OP), will undergo a similar reverse split of its partnership units on the same date, reducing the number of outstanding units from about 2.1 million to approximately 0.2 million.
This corporate action is not expected to alter stockholders' ownership percentages significantly, except for minor changes due to the cash payment for fractional shares. Stockholders may need to contact Ashford Trust's transfer agent, Computershare, for assistance related to the reverse stock split.
Ashford Hospitality Trust specializes in investing in upper upscale, full-service hotels. The company's forward-looking statements in the press release reflect its expectations and assumptions about future performance, which are subject to change and should not be relied upon unduly by investors.
This news is based on a press release statement and provides the latest details on the company's strategic financial maneuver to maintain its listing status and adjust its stock structure.
In other recent news, Ashford Hospitality Trust reported a slight decrease in revenue per available room (RevPAR) for the third quarter of 2024, with a 1.6% decline compared to the same period in 2023. The company also revealed its capital raising efforts, having raised approximately $167 million in gross proceeds through Non-Traded Preferred Equity offerings. On the financial front, Ashford Trust reported a net income of $44.3 million and adjusted funds from operations per diluted share of $0.27 in its second quarter of 2024.
In response to a non-compliance notice from the New York Stock Exchange (NYSE), Ashford Trust plans to implement a 1-for-10 reverse stock split to meet the NYSE's minimum average share price requirement. In a move to manage costs more effectively, the company has also amended its hotel management agreement with Remington Lodging & Hospitality, introducing a cap on the monthly Group Services fee charged per hotel room.
Ashford Trust also exchanged approximately 135,002 shares of its Preferred Stock for roughly 2.46 million shares of Common Stock, a strategic move for capital restructuring. Among other recent developments, the company sold seven assets for over $310 million and raised nearly $147 million through non-traded preferred stock offerings. These developments reflect Ashford Hospitality Trust's ongoing efforts to position itself for continued growth.
InvestingPro Insights
As Ashford Hospitality Trust (NYSE: AHT) implements its reverse stock split to maintain NYSE listing compliance, investors should consider additional financial metrics and insights provided by InvestingPro.
According to InvestingPro data, AHT's market capitalization stands at $33.25 million, reflecting its current position in the hospitality REIT sector. The company's P/E ratio of 2.13 suggests that it may be undervalued relative to its earnings, which could be of interest to value-oriented investors considering the stock post-split.
InvestingPro Tips highlight that AHT's stock is currently trading at a low earnings multiple, which aligns with the company's efforts to boost its share price through the reverse split. Additionally, the tip indicating that net income is expected to grow this year could provide a positive outlook for the company's financial health post-restructuring.
It's worth noting that AHT's revenue for the last twelve months as of Q2 2024 was $1.28 billion, with a revenue growth of -4.98% over the same period. This decline in revenue, coupled with the InvestingPro Tip that analysts anticipate sales decline in the current year, suggests that the company faces ongoing challenges in its operating environment.
Investors should be aware that AHT's stock price has fallen significantly over the last year, with a one-year price total return of -71.62% as of the latest data. This context underscores the necessity of the reverse stock split to maintain NYSE listing requirements.
For those seeking a more comprehensive analysis, InvestingPro offers 17 additional tips for AHT, providing a deeper understanding of the company's financial position and market performance.
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