In a recent SEC filing, Ashford Hospitality Trust Inc . (NYSE:AHT) announced that its subsidiary, Ashford (NYSE:AINC) TRS Corporation, has amended its hotel management agreement with Remington Lodging & Hospitality, LLC. The amendment, effective as of Tuesday, introduces a cap on the monthly Group Services fee charged per hotel room.
The new cap is set at $38.32 per room per month and is subject to an annual increase starting in 2026 based on the greater of 3% or the change in the Consumer Price Index. Notably, this cap will not affect hotels where the New Lessee is not a wholly-owned subsidiary of Ashford TRS.
Additionally, the amendment stipulates that any unpaid balance due to the cap will be paid by Ashford TRS. However, for the year 2024, the cap will be disregarded when calculating the Incentive Fee as defined in the original management agreement.
This move comes as part of Ashford Hospitality Trust's efforts to manage costs more effectively. The company has provided the full text of the amendment and the original management agreement as part of its SEC filing, allowing stakeholders to review the details of these changes.
The real estate investment trust, which specializes in the hospitality industry, is headquartered in Dallas, Texas, and operates under Maryland incorporation. As per the SEC filing, the amendment was signed and came into effect on September 11, 2024, and was filed with the SEC the following day. This information is based on the press release statement provided in the SEC filing.
In other recent news, Ashford Hospitality Trust Inc. posted a net income of $44.3 million and adjusted funds from operations (AFFO) per diluted share of $0.27 in its second-quarter 2024 earnings call.
The company also reported the exchange of around 135,002 shares of its Preferred Stock for approximately 2.46 million shares of Common Stock, a move aimed at capital restructuring. The exchanged Preferred Stock has been retired and cancelled, and the newly issued Common Stock shares are exempt from registration.
In addition, Ashford Hospitality Trust has sold seven assets for over $310 million and raised nearly $147 million via non-traded preferred stock offerings.
The company reported increases in comparable hotel revenue per available room (RevPAR), ancillary revenue, and group revenue pace. Ashford's strategic initiatives include ongoing capital expenditures, with guest room renovations and other projects planned for the latter part of the year.
InvestingPro Insights
In light of the recent changes to Ashford Hospitality Trust Inc.'s (NYSE:AHT) hotel management agreement, it's valuable to consider the company's financial outlook and market performance as reported by InvestingPro. According to real-time data, AHT has a market capitalization of $42.55 million. Despite the challenges highlighted by a revenue decline of nearly 5% over the last twelve months as of Q2 2024, InvestingPro Tips suggest that the company is expected to see net income growth this year. Additionally, AHT is trading at a low earnings multiple with a P/E ratio of 2.72, which may indicate that the stock is undervalued relative to its earnings.
However, analysts are anticipating a sales decline in the current year, and the stock has experienced high price volatility, with a 1-year price total return of -72.47%. These metrics underscore the importance of the company's cost management strategies, such as the newly introduced cap on management fees. The company's liquid assets exceeding short-term obligations could provide some financial flexibility amid these conditions.
For investors seeking more detailed analysis, there are 16 additional InvestingPro Tips available, which can offer further insights into Ashford Hospitality Trust's performance and outlook. These tips can be accessed by visiting the InvestingPro platform specific to AHT.
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