Ashford Hospitality Trust (NYSE:AHT) recently conducted its Fourth Quarter 2023 Results Conference Call, outlining a strategic plan focused on reducing corporate financing by 2024 with the aim of reinstating a common dividend in the future. The company plans to raise capital through asset sales, mortgage debt refinancing, and non-traded preferred capital raising. Ashford (NYSE:AINC) Hospitality Trust reported a net loss for the quarter and full year but achieved 1.6% RevPAR growth in the fourth quarter.
The company has initiated several asset sales, including the Hilton Boston Back Bay and the Residence Inn in Salt Lake City, with proceeds designated for debt repayment. The company's outlook for room revenue in 2024 and 2025 is positive, with expected increases of 8% and 13% respectively. They are also making strides in non-traded preferred stock offerings, having raised approximately $105 million in gross proceeds.
Key Takeaways
- AHT is focused on paying off its strategic financing by 2024 to potentially reinstate a common dividend.
- Capital is being raised through asset sales, refinancing, and non-traded preferred stock offerings.
- The company has signed agreements to sell multiple assets, including the Hilton Boston Back Bay and the Residence Inn in Salt Lake City.
- AHT achieved a 1.6% RevPAR growth in Q4, led by a 3.4% increase in average daily rates.
- A net loss was reported at $31.3 million for Q4 and $193.7 million for the full year.
- The company ended the quarter with $3.3 billion in loans and $165 million in cash and cash equivalents.
- Room revenue is expected to grow by 8% in 2024 and 13% in 2025.
- Food and beverage revenue and margin have shown improvements.
- AHT has no plans to contribute more assets to the Sterling Hotels and Resorts platform.
Company Outlook
- AHT anticipates an increase in room revenue by 8% for 2024 and 13% for 2025.
- Plans to spend between $85 million and $105 million on capital expenditures in 2024.
- The company is exploring additional brand conversions, strategic partnerships, and high-yield renovations.
Bearish Highlights
- AHT reported significant net losses for both the quarter and the full year.
- Some asset sales have fallen through due to financing issues or overaggressive deals.
- The company is experiencing delays in the sale process due to complications with CMBS loans and servicers.
Bullish Highlights
- Strong group performance at the Marriott Crystal Gateway hotel, with a 21% increase in group room revenue.
- Positive trends in food and beverage revenue and margins.
- Key markets like DC hotels saw a 6% increase in comparable hotel RevPAR during the fourth quarter.
Misses
- The process of banks taking back CMBS loans has been slow, causing frustration for AHT.
Q&A Highlights
- The company is working on refinancing loans for several properties, including the Renaissance Nashville and the Marriott Gateway in Arlington.
- AHT has raised approximately $105 million in gross proceeds from their non-traded preferred stock offering.
- The company clarified that Sterling properties will become unconsolidated as ownership is diluted down.
- AHT is marketing assets to generate proceeds and is looking for the best economic value, considering factors such as upcoming CapEx or franchise agreement expirations.
Ashford Hospitality Trust is maneuvering through a complex financial landscape with strategic asset sales and refinancing efforts to improve its balance sheet. The company remains committed to paying off its strategic financing and reinstating dividends to its shareholders in the future. Despite the challenges, AHT is optimistic about its room revenue growth and the potential to raise capital at NAV through Ashford Securities. The company's executive team expressed gratitude for the ongoing support and is hopeful for a quicker resolution to the delays caused by CMBS loan complications.
InvestingPro Insights
Ashford Hospitality Trust (AHT) has been navigating a challenging financial terrain, making strategic moves aimed at improving its financial standing and future prospects. Key insights from InvestingPro provide a deeper understanding of the company's current market position:
InvestingPro Data:
- Market Cap (Adjusted): 74.86M USD indicates the company's current valuation in the market, which is particularly relevant for investors considering the company's asset sales and refinancing plans.
- Revenue Growth (last twelve months as of Q3 2023): 16.43% demonstrates that despite the reported net losses, the company has been able to grow its revenue, aligning with the positive outlook for room revenue growth in 2024 and 2025.
- EBITDA (last twelve months as of Q3 2023): 310.79M USD, with a growth of 24.77%, which is a crucial metric showing the company's earnings before interest, taxes, depreciation, and amortization, indicating operational profitability.
InvestingPro Tips:
- AHT has shown a significant return over the last week, with a 23.72% price total return, which may catch the interest of investors looking for short-term gains.
- The stock is trading at a low revenue valuation multiple, suggesting that it may be undervalued based on its revenue streams, which could be an attractive point for value investors.
For those looking to delve deeper into Ashford Hospitality Trust's financials and market performance, there are additional InvestingPro Tips available at https://www.investing.com/pro/AHT. Use coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, and gain access to a comprehensive list of 15 InvestingPro Tips that could help inform your investment decisions.
Full transcript - Ashford Hospitality Trust Inc (AHT) Q4 2023:
Operator: Hello, and welcome to Ashford Hospitality Trust Fourth Quarter 2023 Results Conference Call. At this time all participants are in a listen mode only A question-and-answer session will follow the prepared remarks. As a reminder, this conference call is being recorded. At this time, I’d like to turn the call over to Jordan Jennings, Director of Investor Relations. Jordan, you may now go ahead and start the conference.
Jordan Jennings: Good day, everyone, and welcome to today’s conference call to review results for Ashford Hospitality Trust for the fourth quarter and full year 2023 and to update you on recent developments. On the call today will be Rob Hays, President and Chief Executive Officer; Deric Eubanks, Chief Financial Officer; and Chris Nixon, Executive Vice President and Head of Asset Management. The results as well as notice of this sensibility of this conference call on a listen-only basis over the Internet were distributed yesterday afternoon in a press release. At this time, let me remind you that certain statements and assumptions in this conference call contain or are based upon forward-looking information and are being made pursuant to the safe harbor provisions of the federal securities regulations. Such forward-looking statements are subject to numerous assumptions, uncertainties, and known or unknown risks, which could cause actual results to differ materially from those anticipated. These factors are more fully discussed and the company’s filings with the Securities and Exchange Commission. The forward-looking statements included in this conference call are only made as of the date of this call, and the company is not obligated to publicly update or revise them. Statements made during this call do not constitute an offer to sell or a solicitation of an offer to buy any securities. Securities will only be offered by means of a registration statement and prospectus, which can be found at www.sec.gov. In addition, certain terms used in this call are non-GAAP financial measures, reconciliations of which are provided in the company’s earnings release and in company’s tables or schedules, which have been filed on Form 8-K with the SEC on February 28, 2024, and may also be accessed through the company’s website at www.ahtreit.com. Each listener is encouraged to review those reconciliations provided in the earnings release together with all other information provided in the release. Also, unless otherwise stated, all reported results discussed in this call compare to fourth quarter and full year ended December 31, 2023 with the fourth quarter and full year ended December 31, 2022. I will now turn the call over to Rob Hays. Please go ahead, sir.
Rob Hays: Good morning. Welcome to our call. After my introductory comments, Deric will review our fourth quarter and full year financial results. And then Chris will provide an operational update on our portfolio. As we announced earlier this year, we are keenly focused on paying off our strategic corporate financing in 2024. We believe this is a crucial step in positioning Ashford Trust back in the path of growth and is necessary in order to reinstate a common dividend in the future. Our plan to accomplish this is multifaceted and provides us with significant optionality to accomplish our goal. It includes raising sufficient capital through a combination of asset sales, mortgage debt refinancings and non-traded preferred capital raising. We currently have more than a dozen assets at various stages of the sales process. And while we’re unlikely to sell all of those assets, we are working diligently to determine which assets are capturing the most attractive valuations while also providing the largest impact to our deleveraging efforts. We now have five assets under signed purchase and sale agreements, up from the three we announced several days ago, and another asset under letter of intent. These six assets have a combined sales price of approximately $225 million. Now as a demonstration of the significant progress we are having in these efforts, this morning, we announced we have signed a definitive agreement to sell the 390 room Hilton Boston Back Bay in Boston, Massachusetts for $171 million or $438,000 per key. When adjusted for the company’s or our anticipated capital expenditures, the sales price represents a 7.3% cap rate on 2023 net operating income or 12.3x 2023 hotel EBITDA multiple. The sale is expected to be completed next month in March and is subject to normal closing conditions. We expect the net proceeds from the sale to be approximately $70 million after the repayment of the underlying mortgage debt and the closing costs, and we anticipate using the net proceeds to pay down our strategic financing. In addition, subsequent to the quarter end, we announced that we’ve signed a definitive agreement to sell our Residence Inn, Salt Lake City, Utah for $19.2 million. That sale is expected to be completed here early March and subject to normal closing conditions. When adjusted for our anticipated CapEx, the sale price represents a 4.6% NOI cap rate on 2023 net income or 18.2x 2023 hotel EBITDA multiple. We expect to use all the proceeds from this transaction to pay down debt. We’re also working with lenders to refinance a loan secured by the Renaissance Nashville in Nashville, Tennessee, the Morgan Stanley Pool (NASDAQ:POOL) Loan with 17 hotels located in several states, the loan secured by the Marriott Gateway in Arlington, Virginia and the loan secured by the Indigo Atlanta, Atlanta, Georgia. We believe there could be substantial excess proceeds from the refinancing of Renaissance Nashville loan, which can be used to pay down the company’s strategic financing. The Princeton Westin, which we are currently running the sales process on, will be unencumbered as part of this financing to the extent it is completed. We also continue to be excited about our non-traded preferred stock offering. We continue to build the selling syndicate and currently have 42 singed dealer agreements representing over 5,840 representatives selling the security. To date, we’ve raised approximately $105 million of gross proceeds, including $21.9 million during the fourth quarter. Given the progress we’re making across these three main trusts of our strategic financing payoff plan, through asset sales, mortgage refinancings and the non-trade preferred offering, we continue to believe that we are on the right path to pay off the strategic financing in 2024. In terms of hotel performance, we are very pleased with the strong operating performance and RevPAR growth we achieved in the fourth quarter. We’re clearly seeing a benefit of a broadly diversified high-quality portfolio that’s balanced across leisure, corporate and group demand sources. RevPAR for all hotels in our portfolio increased 1.6% in the fourth quarter compared to the prior year quarter. This RevPAR growth was led by average daily rates, which increased 3.4% over the prior year quarter. We are also pleased that this strong performance is continuing into 2024 with our January total revenue growth of 5.3% for the portfolio. I will now turn the call over to Deric to review our fourth quarter financial performance.
Deric Eubanks: Thanks, Rob. For the fourth quarter, we reported a net loss attributable to common stockholders of $31.3 million or $0.90 per diluted share. For the full year, we reported a net loss attributable to common stockholders of $193.7 million or $5.61 per diluted share. For the quarter, we reported AFFO per diluted share of negative $0.36, and for the full year, we reported AFFO per diluted share of $0.72. Adjusted EBITDAre for the quarter was $62.5 million and $324.5 million for the full year. At the end of the fourth quarter, we had $3.3 billion of loans with a blended average interest rate of 8% taking into account in the money interest rate caps. Considering the current level of SOFR and the corresponding interest rate caps, 92% of our debt is now effectively fixed as almost all of our interest rate caps are now in the money. During the quarter, we extended our Morgan Stanley loan pool secured by 17 hotels, which we extended for one year with no pay down. We ended the quarter with cash and cash equivalents of $165 million and restricted cash of $146 million. The vast majority of our restricted cash is comprised of lender and manager held reserve accounts and $2.5 million related to trapped cash held by lenders. At the end of the quarter, we also had $22 million due from third-party hotel managers. This primarily represents cash held by one of our property managers, which is also available to fund hotel operating costs. We ended the quarter with net working capital of approximately $209 million. As of December 31, 2023, our consolidated portfolio consisted of 90 hotels with 20,549 rooms. At the end of the year, our share count consisted of approximately 39.4 million fully diluted shares outstanding, which is comprised of 37.4 million shares of common stock and two million OP units. In the fourth quarter, our weighted average fully diluted share count used to calculate AFFO per share included approximately 1.7 million common shares associated with the exit fee on the strategic financing we completed in January of 2021. While we are currently paying our preferred dividends quarterly or monthly, we do not anticipate reinstating a common dividend for some time As an update, during the quarter, we completed the transfer of ownership of the hotels that secured the KEYS F loan pool to the lender, and we continue to work with the lender for the KEYS A and KEYS B loan pools on a consensual transfer of ownership of those hotels to the lender. At this time, we are unable to provide an estimate on the timing of when that transfer will occur. This concludes our financial review, and I would now like to turn it over to Chris to discuss our asset management activities for the quarter.
Chris Nixon: Thank you, Deric. For the quarter, comparable hotel RevPAR for our portfolio increased 1.6% over the prior year quarter, marking 11 consecutive quarters of year-over-year RevPAR growth. Full year comparable hotel RevPAR increased 9.5% over the prior year. Our full year RevPAR growth was nearly double the national average. I would like to take a few minutes to highlight some of the work from our team, including actively increasing our group position across our portfolio, strengthening our food and beverage outlets and capitalizing on high-demand events in some of our major markets. Group room revenue for the full year exceeded the prior year by 16%. This is a strong quarter for group booking activity. We started the quarter with approximately $34 million in on the book’s group room bookings for the fourth quarter. During the fourth quarter, we added over $19 million in additional group room revenue. As a comparison, on a more stabilized basis, in 2019, we added just over $18 million of group revenue during the fourth quarter. As we enter the year, our group room revenue for 2014 – for 2024 and 2025 is pacing up 8% and 13%, respectively. A hotel that had strong group performance this quarter was one of our largest hotels, the Marriott Crystal Gateway, where group room revenue grew by 21% compared to the prior year quarter. During the fourth quarter, the hotel was successful in increasing group room nights, which allow the team to yield out lower-rated transient and government per diem business. Much of the increased production occurred over the traditionally slower holiday pattern between Christmas and New Year’s. Food and beverage revenue per occupied room grew by 8%. And food and beverage margin improved by 284 basis points compared to the prior year quarter. On a full year basis, food and beverage revenue grew 18% and food and beverage margin improved by 227 basis points compared to the prior year. This was led by the Hyatt Regency Savannah and Renaissance Nashville, which achieved full year food and beverage revenue growth of 22% and 18%, respectively, compared to the prior year. Renaissance Nashville had a record-breaking year with banquet revenue growing 24% compared to the prior year. The team was successful in backfilling lower-rated, citywide demand with self-contained groups that had higher banquet and catering spend. Hyatt Regency Savannah benefited from a great shopping initiative, which we ran across our entire portfolio. This initiative optimized menu prices by benchmarking comparable items across an array of menus. In addition, our team aggressively increased the required minimum spend on catering contracts. These efforts throughout the year helped us achieve full year banquet revenue growth of 34% over the prior year. Several key markets within our portfolio had strong quarters. For example, our DC hotels, which make up 12% of our portfolio by key count, increased comparable hotel RevPAR by 6% during the fourth quarter compared to the prior year quarter. During the fourth quarter despite the headwinds related to the potential government shutdown, which resulted in occupancy declining 50 basis points, our hotels proactively remixed in the non-government segments that drove rate by 6% compared to the prior year quarter. Moving on to capital expenditures, in 2023, we completed the renovation of the lobby and bar at the Ritz-Carlton Atlanta, the meeting space at Embassy Suites Crystal City and relocated the concierge lounge and added a premium suite at Renaissance Nashville. Across our entire portfolio, we spent approximately $110 million on capital expenditures in 2023, excluding development projects. For 2024, we anticipate spending between $85 million and $105 million on capital expenditures. We reported outside performance in revenue and profitability for 2023. And looking forward, group business is pacing favorably and positioning us well for the coming years. Food and beverage is strengthening, and we are increasing ancillary revenue capture. We continue to evaluate several new initiatives across our portfolio, such as additional brand conversions, strategic partnerships and high-yield renovations. This concludes our prepared remarks, and we will now open up the call for Q&A.
Operator: [Operator Instructions] Our first question comes from Tyler Batory from Oppenheimer. Your line is now open.
Jonathan Jenkins: Hi, good morning. This is Jonathan on for Tyler. Thanks for taking our question. First one for me. With the Hilton Boston Back Bay announced this morning and the $70 million of expected net proceeds, does that change how you’re thinking about the remaining potential asset sales and the dollar amount or number of sales that you would need to get comfortable paying off the Oaktree loan?
Rob Hays: It does impact the overall analysis. Obviously, what we’re attempting to do is just keep as much optionality open as we can in terms of determining what’s the right path to get the financing paid off. And obviously, the net proceeds of $70 million is a decent sized chunk of being able to pay down the financing. So yes, so it does kind of impact it. And again, as we’ve said in our remarks, we’re unlikely to sell all of these assets, but just given how choppy sometimes the sales markets have been, we’ve had, for example, a couple of the assets that were previously under LOI that fell through, we just wanted to create as much optionality as we can. So it does seem like the odds, I think, of getting some of these deals over the finish line continues to improve as the financing markets are improving. I mean we’re seeing that ourselves as we’re in the market as we mentioned in our comments on several loans and refinancings. And so we have seen spreads come in. We’ve seen rates go down a little bit. So I think we’re hopeful that, that translates into the transaction market, and we can get a handful of these assets over the finish line to be able to take out the financing.
Jonathan Jenkins: Okay. Excellent. Thank you for the color there. And then switching gears to the refinancing. Can you maybe walk us through how you’re thinking about that, the gains that are potentially embedded there? And any potential timing of when those refinancings could be completed?
Rob Hays: Sure. I think most of the refinancings as we’ve mentioned, are mostly like-for-like, where there’ll just be kind of refinancings of existing proceeds levels. The exception to that is the Renaissance Nashville that we mentioned, where we do think we’ve got the ability to pull somewhat at least consider material proceeds out of there. And we’re not talking $1 million or $2 million, but potentially tens of millions of dollars. And at the same time, unencumbered Princeton, which is on our for-sale asset list, so that to be able to sell that here in the next several months. Unencumbered is obviously very helpful, and we think it generate a sizable amount of proceeds given the performance of that asset, which continue to improve. So we’re looking – we’ve got a handful of these loans in the market. For most of them, we’d like to get them done in the next 30 days to 60 days. But again, we’ll see how the financing markets continue to move.
Jonathan Jenkins: Okay. Great. I appreciate the color. And then maybe last one for me. Rob, I give you the team a lot of credit for the communication and execution on the plan of first executing the cash traps now working to take out the strategic financing. Can you maybe walk us through the playbook of what comes after the strategic financing is taken out? I mean, will the focus be on continued deleverage or maybe the growth pedal going forward? Or kind of how are you thinking about that?
Rob Hays: Yes. That’s a good question. And I think that’s obviously where we want to get focused here is to kind of move past this stage of the kind of AHT story and moving to the next one. And that’s why we’re so focused on strategic financing. They’ve been great partners, but the capital has been expensive and we think it’s a demonstration that we’re moving on to the next phase of the company. I think it’s a combo of things. I think one is, at some point in time, we’d like to obviously turn a dividend back on. It’s unlikely to be sizable right out of the gate, but it’s something where we want to signal some health in the company by turning on the dividend. I do think this is a crucial part of why our nontrade preferred and all of the partnership that we have with Ashford Securities is so important, because we do see that as potential growth capital to be able to go do deals that we like and to continue to grow on that side. And then I do think you’ll see, I think, selective sales in order to delever. And that’s, I think, predominantly to clean up the portfolio, just continue to invest in our higher-quality assets, assets that we think are longer term, and we do have some assets some lower RevPAR, full-service assets and a variety of select service assets that we don’t think are necessarily key long-term assets that we’d like to kind of clean up over time. So there’s – there will be several moving pieces here, right? I think the improvement in the portfolio continue to delever, but then going on offense with the help of the Ashford Securities platform.
Jonathan Jenkins: Great. I appreciate all the colors. Thank you. That’s all for me.
Rob Hays: Thank you.
Operator: Thank you. Our next question comes from Michael Bellisario from Baird. Your line is now open.
Michael Bellisario: Good morning everyone.
Deric Eubanks: Good morning.
Rob Hays: Good morning, Michael.
Michael Bellisario: Rob, just first question, the $220 million or $225 million of gross proceeds, just for modeling purposes, how should we think about the net proceeds above and beyond the $70 million for Back Bay?
Rob Hays: It’s going to be probably somewhere – probably an incremental $15 million to $20 million.
Michael Bellisario: That’s helpful. And then as we’re thinking about you paying off Oaktree; can you remind us what’s the exit fee? What’s the calculation there? How many more dollars might need to go out of your pocket above and beyond the stated principal balance, and then any other share dilution potential?
Rob Hays: Sure. I think the biggest factor in that is just really the exit fee, and the exit fee is a total of 30% of the total principal balance that was drawn – 15% of the total principal balance that was drawn down, which was $30 million and we currently have the ability to pay up to half of that in stock. So it’s somewhere between $30 million of cash to $15 million of cash on top of the $183 million.
Michael Bellisario: Got it. Understood. And then you didn’t talk about it, but the Sterling REIT that you guys have created, I think it’s seated with four assets. What are the longer-term plans there? Is there a thought to contribute more assets to that platform? And then how should we think about the fundraising for that non-traded REIT versus what you’re trying to do at the corporate level for your non-traded preferred fundraising?
Rob Hays: Sure. Well, let me take the first part of that, and then I’ll have Deric step in because he’s more actively involved on the Sterling side than I am. But it was something where we out to contribute those four select service assets. We thought those were very high-quality assets. It’s just not consistent with what we hope to be the long-term strategy of Ashford Trust. And it was so away that we thought that potentially over time if Sterling is successful that there could be opportunities potentially to sell assets over there for trust potentially for cash. But as we sit here today, we’ve got kind of no intention; I think to contribute more assets into it. It’s something where it was just kind of a way to get them started. There were some benefits to trust to, again focus its strategy. But I’ll let Deric take kind of the longer-term view of it.
Deric Eubanks: Yes. In terms of the Sterling Hotels and Resorts platform, Mike, it’s a process to get that up and running. We are rising capital through Ashford Securities, which will go through a network and a syndicate of broker-dealers and RIAs. And so that’s the process, it’s being privately offered to credited investors. And we’re optimistic that it’s a pretty interesting way to raise capital. And especially when a scenario we’ve got hotel REITs that trade at discounts at NAV and we can raise capital at NAV and allow investors to have some liquidity to get out at NAV that we think it will be a pretty interesting vehicle and structure for hotel investment going forward.
Michael Bellisario: Got it. Understood. And then for the time being, AHT effectively owns 100% of the shares and that runs through the P&L, those hotels are just excluded from the comp base, correct?
Deric Eubanks: That’s right. So it’s not exactly 100%, but very close to 100% currently. And then as we raise capital in that platform, that ownership will be diluted down. I anticipate – so at the end of the fourth quarter, those Sterling properties were consolidated on Ashford Trust financial statements. That will be the case until that ownership is diluted down some. So it’s still kind of TBD on when those assets would become unconsolidated.
Michael Bellisario: Helpful. Thank you.
Deric Eubanks: Thanks Mike.
Operator: Thank you. [Operator Instructions] Our next question comes from Bryan Maher from B. Riley Securities. Your line is now open.
Bryan Maher: Thanks and good morning. Just trying to clarify the math a little bit. I think you said you had five assets under purchase sale, one on the LOI, so six total, $225 million. Did that $225 million include the $171 million from Boston?
Rob Hays: Yes. Those are all combined.
Bryan Maher: And does that number also include the residents in Utah?
Rob Hays: Yes, it does.
Bryan Maher: Okay. So the other ones are kind of going towards a fairly low price?
Rob Hays: Yes. They’re the select service assets.
Bryan Maher: Got it. And you said that some that were for sale, the transactions fell through. Can you give us any color as kind of why something would fall through? And mainly who are buyers you’re talking to of assets that you’re still marketing? Are they bigger entities? Are they local buyers?
Rob Hays: Yes, it’s a good question. I’ve actually been extremely encouraged by the kind of the breadth of buyers out there, and it’s basically exactly what you said. I mean it’s a combination of private equity of a variety of sizes. I mean, it’s everything from the big boys that we all name to smaller funds that have been started up kind of looking to get their foot in the door, maybe it’s a group that had started in select service assets and then looking to get into the full service side. But then as well as these assets are ones that do have kind of regional vibes to them. I mean there are a lot of local owner operators that are around Princeton, New Jersey, that are in Florida, that are in the Southeast and with Savannah. So we’re finding a good mix of both. In terms of why things are falling out, it’s been typically financing related or kind of just – I don’t know, sometimes people get a little aggressive maybe in trying to lock up a deal and try to preempt the process. And then once they kind of get into it a little bit, realize maybe they got over their skis. But each one kind of in its own little story and it’s only been a few of them. But again, that was one of the kind of the impetus to create, again, more optionality to just see where we can get movements so that we’re not just executing – trying to execute on one or two, realize that process isn’t going well or getting to the finish line and having it fall through and then have to start a little over again. We’re trying to be, I think, much more aggressive and thoughtful about putting lots of lines in the water and those that can create value the quickest and create proceeds for us to move on from the strategic financing and they’re going to win.
Bryan Maher: So are the assets that you’re marketing for sale, are you looking at it purely on an economic standpoint where you can get the most dollar bang for your buck? Or are there assets in there where you’re looking to lighten up on the market for one reason or another?
Rob Hays: Yes, it’s both. You’re exactly right, Bryan, it’s both. But the frustration that we have is that those markets or that asset may not be the one getting the traction that I wish, right? And so that’s kind of the tension. Now if – let’s say that we had equal interest and equal kind of value on all of the assets, and yes, that’s absolutely something where there’s maybe certain assets that have a lot of CapEx coming due, maybe it’s a franchise agreement expiring, maybe already have a lot of exposure there, whatever it may be. And that – all things being equal, I’d prefer that asset over another. But at the end of the day, we just have to kind of, again, put them all out there and see what we’re dealing with from a market and transaction standpoint, and they just do the best we can to navigate both. And there’s obviously some of these assets that we’re selling that I really like and that I would prefer to keep. But the reality is that we’ve got to generate some proceeds. And so I’m trying to try to minimize a number of the – some of those assets that I sell and try to sell more of the ones that I prefer not to keep or reduce the market exposure, but we’ll see how that process plays out in the next couple of months.
Bryan Maher: Okay. Just last for me. On pools A and B, I mean, this process is going on for like at least six or seven months. What is the holdup on the banks taking these back? I mean one would think that as long as the market is fairly decent out there and some hotels are transacting and that there are buyers that they would take these things and flip them, I mean, what’s holding this up?
Rob Hays: Yes. So I’ll give you a little bit of color that hopefully – because I promise you, your frustration and our shareholders frustrations do not match our frustration. So – and so what happens, at least there’s a little bit of complication around them is like, one, they’re CMBS loans. And just when you’re dealing with these CMBS trust and you’re dealing with these servicers – special servicers, they just aren’t empowered to move as quickly and make decisions as quickly as a balance sheet lender, right? So there’s just a certain amount of process and they’re hemmed in by the documents, and they are beloved to do anything outside of those documents, just reliability reasons and whatnot. So there’s a very, I think, defensive-minded aspect to just the process itself. The KEYS F ended up moving a little bit quicker because one of the pieces someone was willing to step into the mezz and buy it from one of the existing mezz holders. And that – therefore, it didn’t have to go through kind of all of the same process, right? They could step into it much more quickly via the mezz. So that’s why that moves before this one. This A and B is one where it seems that the mezz isn’t going to be participating and isn’t going to be in it. And so that itself takes time and process to basically move them out of the capital structure. Our understanding is that has recently been completed. And so we are hopeful that, that therefore, is now clearing the path for this to move quicker. But as we said in our comments, we don’t know. And so I literally do not know if I get notified today that this is going to be happening ASAP or it’s still going to be a little bit longer. But what I can say is that there has been movement in some of these processes. So we are hopeful that it will be soon. But it’s just a very complicated process, and we are just dealing with CMBS servicers and special servicers that it just tends to be slow given the nature of the documents.
Bryan Maher: Thank you. That’s very helpful.
Operator: As of right now, we don’t have any raised hands. I’d now like to hand back over to the management for their final remarks.
Rob Hays: All right. Thank you, everybody, for your time on this call today. We are very committed to getting the strategic financing paid off. We appreciate all your support as we continue to execute on this plan, and we will talk to you during our next quarterly call.
Operator: Thank you for attending today session. We hope you have a wonderful day.
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